Jeremy Grantham is the veteran fund manager who founded the US investment firm GMO. He is also a specialist in defining and identifying bubbles, which he rightly regards a crucial task in the investment game. He claims to have identified 34 of them over the years and says only two have failed to burst or deflate. One is today’s UK housing market.
Grantham’s findings are worth exploring in light of last week’s news from the housing market. The Halifax reported that average house prices fell by more than £6,000 in September to £162,096, a drop of 3.6% from August and the biggest monthly fall on record.
Despite such dramatic figures, many economists were sanguine. They said it was far too early to declare that house prices, having recovered about half their post-banking-crisis fall of 15%, had embarked on another lurch downwards. The Halifax’s Martin Ellis pointed to the three-month rolling average, which he regards as a better guide to the underlying trend. T
Prepare for weather-related disruptions this winter, business group advises small businesses.