Groucho Marx and Property Bubbles

The commercial property market in London has been booming for several years. The Bank of England is concerned about yet another property bubble building up. The executive director for financial stability, strategy and risk at the Bank, Alex Brazier, warned in a speech last month that positive sentiment in the industry must be “tempered by experience of past business cycles”, so that we are not doomed to repeat previous booms and busts. The Bank is constructing an index for banks and investors to show how prices compare with lending and cash flow. If the market pays attention, there will be less risk of it getting carried away.