Tuesday, July 26, 2005

Britain's Bubble Pop

There's a sad sign of the future across the Atlantic as reported today by the Associated Press. Just like the US, Britain saw remarkable gains in its housing market at the end of the 1990s and during the start of the new millenium. But, it has since cooled, leveled off and if that doesn't scare the hell out of anyone thinking about financing with an interest-only mortgage, or some similar high-risk loan product, then nothing will:
New data from Rightmove, which tracks the British property market, shows that there has been zero growth in housing prices over the last year from an 18 percent gain at the height of the expansion in July 2004. The Royal Institution of Chartered Surveyors reported that sales are down 25 percent from a year ago.

All this is bad news for the British economy. As the housing market has slowed, it has hurt consumer spending at the same time that the jobless rate is rising and manufacturing remains sluggish. New data released last week showed that the economy grew at an annual rate of 1.7 percent in the second quarter, the slowest in 12 years.

Is it just me, or does this all feel very much like the dot-com boom and bust?