Whilst the focus of most UK commentators seems to be firmly on the recovery in UK property prices, a far more important trend (from a global perspective) has been occurring in the US. Having fallen for three years, US prices have risen now for 5 consecutive months, rising by 0.8% in the month of September in the latest figures published today.

The relevance of US house prices may not be immediately apparent but it is very important for three primary reasons:-

1. There is over $14 Trillion of US mortgage debt outstanding  of which nearly $9 trillion is financed through the financial markets through securitisation. With falling prices the confidence of both investors and issuers is undermined, as the value of the underlying assets is decreasing

2. The US economy is the largest in the world. Like the UK, most people’s wealth is tied up in property. Rising property prices create greater confidence that expands across the economy and helps to increase general consumer spending

3. Despite all evidence to the contrary,  there are still a large number of bankers who seem to believe that US and UK property prices are correlated. So, rising US prices combined with rising UK prices will increase confidence in the UK property market.

We now appear to be very firmly past the bottom. The question remains however as to how long and strong these trends will be