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The end of the house price boom is what will finally sink Brown

Wednesday, 5th December 2007

Like Wile E Coyote, the cartoon character who stays aloft long after he has run off the edge of a cliff, the British housing market has constantly defied gravity.

Like Wile E Coyote, the cartoon character who stays aloft long after he has run off the edge of a cliff, the British housing market has constantly defied gravity. Until now. A raft of figures in recent days has confirmed the inevitable: the great British housing boom is finally at an end. That, far more than the illegal funding scandal currently engulfing the Labour Party, is the news Prime Minister Gordon Brown should truly dread.

As long as house prices kept rising, boosting people’s wealth, the 70% of the British population that own their own home (usually courtesy of a massive mortgage) were ready to put up with a lot. They turned a blind eye to Britain’s relatively weak economic growth, falling competitiveness, surging budget deficit and even rising taxes. While property prices went on rising, Mr Brown’s (over-blown) reputation for economic competence was guaranteed; there was nothing anybody could say or do to change this.