It is popularly thought and much asserted that the trigger for the house price crash of the early 1990s was rising unemployment.

Indeed, the Government, although with decreasing vigour of late, likes to point to the strong UK employment figures and suggest that these will help sustain residential property prices.

The trouble is the facts don’t seem to support the argument. If we look at the data from that period we find, as my good friend Martin Hewes regularly reminds me, that the rise in unemployment came after house prices started to sink.

Here’s a couple of graphs (HPI and unemployment – just left click on the link to open or right click to save) using the HBOS (Halifax) monthly house price figures and the LFS measure of unemployment – that’s the one it’s harder to fiddle.

So what are we to make of the data, assuming you accept them. As the graph of measured prices and unemployment shows, house prices peaked in May 1989 while unemployment bottomed in May 1990.

The other graph, house prices and unemployment compared to a year earlier, shows that on an annualised basis house price inflation went negative in March 1990, but unemployment didn’t start rising on an annualised basis until August that year.

You could argue with some justification that the unemployment data will tend to lag, given the threat of redundancies and a cooling in the employment market will tend to precede events on the ground.

But the idea that the signal is so strong a year ahead of rising unemployment that it causes the housing market to go into reverse is a touch difficult to accept.

Could it be that it was falling house prices that actually caused unemployment to rise?

The point is a causal link is hard to stand up, although you would have a stronger case arguing that falling unemployment can lead to rising house prices. As the data show unemployment peaked in Jan 1993, but it was not until July 1995 that house prices finally bottomed out.