Oh dear! House prices might crash! How awful!

I've turned into an old fart. I sit here and hanker for the old days.

The particular theme of my hankering at the moment is about measuring the success of the economy, and, specifically, annoyance about the currently elevated role of house prices in gauging the success of the economy.

In essence, I couldn't care a "flying bat's fart" (phrase copyright: Nick Clegg) about house prices. If they go up - fine. If they stay static - fine. If they go down - whoopee. They have damn all to do with the health of the economy and anyone who worries about them (in the context of the overall health of the economy) and any journalist who writes that the economy is going over a cliff because house prices are static or falling should grow up and get a life.

The basis for my scepticism for the "house price fall/economy doomed" thesis is harking back to the good old days:

Good Old Days element 1:

Richard Baker. Ah yes, they don't make newsreaders like him anymore. Square jawed. Navy type. Used to having his "back to the wall" during the war. Oxford accent. He used to tell us about the balance of payments. Imports were more than exports: Bad news. Exports were more than imports: Good news. Excellent. You knew where you stood. The news was accompanied by film of solid things you could touch and tap being put aboard ship to be exported at Tilbury docks.

Good Old Days element 2:

You were taught at school that the basis of the world's economy is primary industries - the extraction of materials form the earth: agriculture, mining, fishing etc. Next along the line are secondary industries which process base materials into saleable objects, i.e manufacturing. Then there are tertiary industries which are service industries: sales, tourism, banking etc. But the success of them all flow, in the end, from primary industries.

House sales are basically part of the tertiary industries. Sales give money to estate agents and occasionally result in releasing money into the economy, causing what Keynes called, I recall, the "accelerator effect". But they are way down the scale in terms of indicators of the basic health of the economy.

So, we now have the Telegraph saying "Property market: Brace yourselves for the crash". I feel sorry for anyone who will get themselves into a negative equity situation as a result of any "crash". And I feel sorry for anyone trying to get rid of their house for unavoidable reasons. But basically my reaction to the Telegraph story, and the many others like it, is: "Big Deal!". The only thing that will really suffer as a result of a house price crash is the financial well-being of estate agents. There are probably too many of them anyway. Are they really adding value to the economy? I mean, all of them? What are they producing, in the end, most of the time - except for presiding over a mammoth game of property pass-the-parcel?

There is a lot of hyper-ventilation about the house market and people enjoy boasting about the price of their house at cocktail parties. But in the end it is all hot air.