Household house price expectations appear to have peaked, as we predicted last month. Recent policy changes may see them retreat more quickly, though we’ll never be able to disentangle the impact from what would have happened regardless.
Households have recently been much warier about buying a major household item than their exceptionally strong house price inflation expectations would suggest they ‘should’ be. Their self-reported enthusiasm on this front has historically been the best retail spending indicator in the survey. But retail spending has recently overshot, reflecting repurposed holiday savings, a catch-up from lockdown, the housing boom and interest-free deals. But it is unlikely to last as the first three of these drivers fade.
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