The UK’s best-known Martha is Miss Martha Lane Fox, the co-founder of Lastminute.com, an internet travel agency that has prospered despite the IT crash. Earlier this week the 30 year-old doyenne of Britain’s dot com boom made the news yet again for selling two million of her Lastminute.com shares, worth 4.6 million pounds. Apparently, she suggested it might be time to buy a new home (amongst other things).
The experts increasingly think otherwise. Almost a year ago the Economist was predicting a property crash, and since then more and more pundits have agreed that the time for a correction must be near. On Monday even Stephen Nickell, a member of the Bank of England’s monetary policy committee (which sets the country’s prime interest rate) warned of the increasing risk of a dramatic fall in property prices.
I couldn’t help wondering about this latest boom last night as I watched the usual Wednesday night litany of property-buying and house-decorating programmes on television. What will the TV producers do once the market turns? Switch from how-to-buy to how-to-sell I suppose, but that’s not likely to be as much fun.
The anecdotal evidence for a bubble is also striking; TV channels are swamped with house-related programmes and there is a good business in seminars offering punters swift riches via the housing market.
But any sell-off needs a catalyst. Higher rates are an obvious trigger but, as Mr [Stephen] Nickell’s remarks show, the Bank is well aware of the dangers and is treading cautiously. Higher unemployment is another potential pitfall, but looks unlikely to be a problem this year. But the catalyst will eventually appear and when it does, the sell-off could be swift; as those buy-to-let investors, desperate to plug a cashflow shortfall, unload their surplus properties on a falling market.
So Martha may have timed her dot com business perfectly, but if she buys a new home soon it may turn out to be rather “last minute”.