Why we should fear the new housing bubble

It’s senseless to ask how things are going to end, because things as a general rule don’t. They rumble on, they morph, and yesterday’s drama becomes tomorrow’s eyebrow-raising justification for thinking that people used to be inexplicable idiots. Nonetheless, I read these stories of house prices rising again and I cannot help but wonder. How is it going to end?

How is it even supposed to end? What is Mark Carney’s golden future? Interest rates stay low, repayments stay low, house prices keep going up and then… what? How do all these people who have overextended themselves eventually underextend themselves so as not to be utterly buggered when rates finally go back up again? What is the correct verb for underextending yourself? Is there one? Have they even planned for that?

Presumably it’s all about inflation. Presumably the idea is that mortgages grow and grow, pound for pound, but that’s going to be OK because each of those pounds, eventually, will be worth much less.