The property boom of the 1980s was triggered by fundamental restructuring in the City institutions. This is well documented, and the market commentaries of the time suggest that the property industry finally twigged when the indicators went off of the scale in 1985. But it was an accident waiting to happen, The deal that led to Big Bang and the rest was struck in 1983. And that in turn was a consequence of the last Labour government dragging the Stock Exchange to the OFT in 1978.
But deregulation alone would never have been enough. Two other 1970s events were crucial. In 1975 the New York Stock Exchange was itself deregulated. Where New York leads London often follows. And at about the same time some Bright Young Things in California were perfecting the technologies that would eventually make electronic trading commercially feasible (it had been technologically possible for ages). But feasibility and a little peer pressure are still not enough. The blue touchpaper had been lit well before.
The reason London did eventually follow New York was that both cities were victims of the same force. Back in the mid 1950s the Bank of England began to encourage the growth of the Euromarkets. In 1960 there were just 73 foreign banks in London, but the Bank's efforts at protecting London's status began a steady increase, such that at one point there were more US banks on London than in New York.
The New York deregulation countered this. What had developed steadily since the late 1950s was competition between financial centres. Competition would lead to integration and pressure for change. From the moment the Bank sat back and left the Euromarkets in peace, things would never be the same. London would experience two quite unrelated booms, but the 1980s boom had already started.
So here I am, spending half my life castigating analysts for looking backwards to look forwards and I'm doing it myself. But there is a difference. What I have described have not been patterns. Certainly not property patterns. I could draw a host of graphs, but they would not be the usual property market indicators. By the time anything registers in them, its all done and dusted. I have tried to indicate the processes of competition and economic development that shape the property indicators. Because long term changes such as these are still out there. Disparate trends will intertwine, reinforce and accelerate.
Sooner or later they will unleash a whirlwind on some unsuspecting city or even country. Perhaps a boom. Perhaps a catastrophic collapse.
If you want to see it coming let those high qualified analysts - economists, geographers, mathematicians, statisticians, even philosophers - off of the leash. Hand the tedious plotting of take-up and supply to Rent-A-Clerk. Let your research workers think and explore They are much more productive doing that anyway. If you don't, you will get caught on the hop again. Somewhere an accident is waiting to happen. So I repeat: When did the next property boom start?
© 1995 Ian Cundell
Originally published in modified form in Estates Times