the Business Forum and
the Economic Partnership
in Brighton & Hove
Homepage    BCRP Intranet    Funding    Events    Knowledgebase    Links    About us     Contact us
Key projects



Workforce development 


Business &

Property &
Development sites




Consultation opportunities

Brighton & Hove Business Forum
8-11 Pavilion Buildings, Brighton, BN1 1EE
Tel: 01273 735442
Email: info@brighton

© Brighton & Hove
Business Forum

News - 16 August 2004

House prices have turned, now what?

It now seems almost certain that house prices have reached the top of their trajectory and are starting to return earthwards. The only question is how far and how fast they will fall and the effect this will have on the economy.

Anecdotal evidence of a stall in the housing market has been rife with many attributing overnight loss of interest from potential buyers to Mervyn King’s (Bank of England Governor) announcement that prices were unsustainably high (see story in Knowledgebase 16th June 2004).

With recorded falls in East Sussex and other parts of the country it now seems only a matter of time before Brighton & Hove follows. There is considerable speculation about the effect that this will have on the consumer activity, which is largely credited with propping up the UK economy. Over the past five years as house prices have doubled consumer borrowing has hit record levels (see story in Knowledgebase 3rd June 2004). Despite this fact, surprisingly the Governor of the Bank of England has cast some doubt on the link between house prices and consumer spending. He suggests that house prices may be correlated to rises and falls in consumer spending but not the cause. He suggests that both may be driven by a common third factor such as expectation about future income, which is not directly related to interest rates and house prices. This view has support from some quarters. The Chief Economist of Capital Economics suggests that consumer spending is actually tracking disposable income and not house price movements.

If this is the case then even quite large falls of 25% - 30% in house prices would have a very limited effect on consumption. Perhaps it was all just a coincidence that, in each of the last three economic cycles when the housing market declined sharply the resulting decrease in consumer spending pushed the economy into recession.

Read related items on:
Market movements
Bank of England
King, Mervyn

Browse our business Knowledgebase or search by keyword


20 March 2018
Brighton names most entrepreneurial city AND second best for student happiness according to Fresh Student Living
19 March 2018
A Meeting with Chris Fox, Lib Dem Peer - Why Business Matters 14 March 2018
Better Business for All Event with BEIS 7 March 2018
Brighton celebrates women in tech as Spring Forward festival returns for a fourth year 6 March 2018
Six months of success for BTN BikeShare 2 March 2018
Sustainability in Action masterclasses for Sussex businesses 2 March 2018
Doing Business in China comes to Brighton 1 March 2018
Brighton & Hove Chamber of Commerce presents: Protecting your brand- a guide for fast growth businesses 1 March 2018
Long haul passengers boost local economy and jobs, according to new Gatwick report on the 'Visitor Economy' 28 February 2018
Save time reporting crime 27 February 2018
Warren Morgan Resigns from Brighton & Hove City Council 23 February 2018
Brighton Technology Company, Paxton Ranks in Sunday Times 100 Best Companies to Work For 23 February 2018
Greater Brighton's Commercial Property Database 22 February 2018
SE-ASSIST - Launch of Loan Capital in Greater Brighton 19 February 2018
House Price update Q4 2017 19 February 2018
What would you do in a crisis? 19 February 2018
The investment journey for high growth entrepreneurs 9 February 2018
Make Change Count 2018 - helping rough sleepers in Brighton & Hove 8 February 2018
Brighton Technology Company Paxton Announces Recipients of New Scholarship Programmein Association with the University of Brighton 8 February 2018
Cyber London Accelerator Invites Summer 2018 Entries 8 February 2018
Innovate UK Launches Strand 2 Emerging and Enabling Technologies Sector Competition 8 February 2018
Success In Sussex As Food And Drink Heroes Crowned Winners 8 February 2018
UK Games Fund - Fourth Round Open to Applications 8 February 2018
Innovate UK & Prince's Trust Launch Young Innovators' Programme 6 February 2018
Brighton & Hove Food Partnership launches 'Kit Out The Kitchen' crowdfunding campaign 2 February 2018
Brighton & Hove Council and Crest Nicholson win £15m government funding to kickstart King Alfred project 1 February 2018
Could a Utilise Plus Programme grant help you? 1 February 2018
Shoreham Port Facilitates Huge Operation 18 January 2018
IUK Announces Collaborative R&D Funding for Connected and Autonomous Vehicles Simulation 18 January 2018
Renault-Nissan-Mitsubishi Launches $1 Billion Corporate Venture Capital Fund for Next Generation Mobility 17 January 2018
PORTlife #17 Newsletter Out Now 17 January 2018
Over £19,000 raised for Burning the Clocks 2017 11 January 2018
Brighton Main Line Improvement Project: Planned closures in October 2018 and February 2019 11 January 2018
Come on in! Fairtrade Fortnight 2018 8 January 2018
Sussex Business SkillSnap targets hospitality industry skill shortage 3 January 2018
House Price update 2017 Q3 20 December 2017
£14.35 Million European Regional Development Fund Launched 19 December 2017
Leading the way - Sustainability in Action masterclass 15 December 2017
Brighton is among the best places to start a business due to their strong growth factors 15 December 2017
GTR consultation ends 20th Dec 2017