Real Recovery On The Cards... ...Across The Pond

Lost in the noise of Christmas crackers and sensational media hype about the approach of the so-called Fiscal Cliff there was this news revealed on Boxing Day - yet another solid sign that the US housing market is improving, even in the depths of winter.

The signs are not like in the UK, where an occasional one-month surge in prices or activity is rather feebly seized upon as a sign of recovery by the likes of the National Association of Estate Agents.

Instead, in the US, every major house price index shows asking and sales prices rising throughout 2012 - most average a rise of about three per cent; starts for new family homes and apartments are running at about 870,000 a year according to the US Commerce Department - that’s 15 per cent up on a year ago; applications for building permits are at a five-year annual high of 900,000 per annum.

A story I have just written, to be published in late January, shows in detail how well the market is recovering in one city, Dallas, and throughout Texas - although that success is gradually being mirrored in many other parts of the country, too.

Goldman Sachs, which ironically has had a good record predicting the US property market, believes the residential sector will continue recovering in the year ahead. “We will see a 20 per cent growth in housing starts and a two to three per cent growth in home prices in 2013” it forecasts.

JP Morgan’s latest figures show mortgage-related revenue over 2012 was up 36 per cent to $1.8 billion: “we believe the housing market has turned the corner” says the company’s latest press release.

This optimism is not heralding an irresponsible return to endless borrowing, however. The US Consumer Financial Protection Bureau is this year introducing new mortgage rules defining which mortgages are calculated to be beyond borrowers’ ability to repay - an explicit attempt to bring morality into the mortgage market.

So three cheers for the US.

The question we’re asking ourselves as we return to work in 2013 is whether the UK government’s Funding For Lending and Build To Let initiatives are enough to mean that, by next Christmas, this country will have a similarly good story to tell?

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