I WAS STARING miserably into a bowl of porridge yesterday morning when suddenly my despair lifted and the world seemed a brighter place. It was all because I had just read that house prices are rising again, by 3.3 per cent over the past 12 months, according to the Office of the Deputy Prime Minister. “Confidence is back,” one estate agent was bragging. “Once again, pessimists have been left out in the cold.”

Actually, I didn’t really feel cheered by the news; quite the opposite. I have never worked out why runaway house price inflation is supposed to be a good thing and falling property prices a bad thing. After all, rising oil prices are considered to spell doom for economy. We don’t like it when the price of clothes or cars go up, and we would positively hate it if the cost of an iPod was soaring. Yet when a semi in Croydon goes up 20 per cent we are supposed to leap about with joy.

Admittedly, if I had a large property portfolio that is exactly what I would do. But I don’t and very few do. Far more people are trying desperately to save up for their first home or are wanting to move from their cramped home to a bigger and better one. For them, the property boom is impoverishing.

But it isn’t just individuals. High house prices are killing the economy. No wonder growth is sluggish when Britons have a collective £3 trillion of wealth tied up in unproductive assets — their homes — which could be better invested in wealth-creating activity. We have gone from being the workshop of the world to being the estate agents’ office of the world, seeming to believe that as a nation we can make ourselves rich by selling houses to each other.

High property prices are also immobilising the labour force, causing skills shortages across the country, and contributing to a plummeting birth rate because no one of child-bearing age can afford a decent home in which to bring up children.

I am not an incurable pessimist. I do have one glimmer of hope: that this week’s housing market figures amount to what on the stock market is called a “dead cat bounce”. Perhaps, come the new year, the housing market will resume the gentle downward trend that has been evident since the summer of 2004. Now that would be reason for cheer.

Ross Clark is the author of The Great Before www.greatbefore.com