Tuesday, 18 December 2007

London shows us the way

When it comes to housing, London leads the way. For the last eight years, it was the powerhouse behind the bubble. Now, it is leading the UK down into a catastrophic housing crash. According to Rightmove, last month the average London asking price fell by 6.8 percent. Across the UK as a whole, prices fell by 3.2 percent.

It is only going to get worse. Personally, I can't wait.


traderboy said...

Whilst house prices are certainly now on the way down in London, surely there is no doubt that there wasn't really a 6.8% fall in November? Almost certainly it was related to the Home Information Pack rules just out, whereby all homes now need to provide them, not just the 3-bed and above (or was it 4-bed and above?)...so I'm sure the market was flooded with a load of 1 and 2-bed properties last month, which are obviously lower priced.

Anonymous said...

Yeah sure it was HIPS, not a market fueled by greedy property speculators and cheap credit - sub prime loans etc that has now dried up and not supporting the bubble, not to mention the higest rate of wage to house price ridiculousness ever seen.

Lets take a look at some of the best "asking price" drops in London shall we:

Islington £492,951 £538,099 -8.40% -£45,147

Hackney £425,007 £473,377 -10.20% -£48,370

S/wark £349,208 £380,873 -8.30% -£31,665

And there is more...

The party is well and truly over..now its time for the hangover from hell.

traderboy said...

i'm sure it is over, and also sure the crash will be faster, deeper and further than almost anyone is imagining. however there is still no way london prices dropped 6.8% last month!

speedtheplow said...

There's too much hope here. We hope for the crash, and while we hope it just won't happen. The BoE will continue to drop interest rates and that will support prices. The BoE is shameless, but they will do what they have to to save UK homeowners. Screw everything else, including inflation.

Anonymous said...

Traderboy...they mean the average..so if you average out all of the price drops in all London boroughs ( a small sample of this list was supplied above) then yes, the "average" fall was 6.8%. But some individual falls per borough saw much worse figures than this.

As far as hoping for a crash..it's here if we like it or not..nothing BoE can do will stop it..its like trying to repair holes in your parachute as you plummet towards the earth...the whole media rubbish about bailouts are to give you the impression that they know what they are doing..they dont.

Dont believe the hype, hold on to your hats its a looong way down.

Budvar said...

I'm no economist here, in fact I was educated at a 3rd rate secondary modern back in the 70s.

Now even I can see that the cheaper the cost of money, the less the value (read purchasing power) the money is worth.
To put this into perspective, if this wasn't the case, why not have 0% borrowing rates, or better still have negative borrowing rates ie for every £100 you borrow, lets say they give you a rebate of £20 every Christmas.
With this scheme, anyone who saves will be penalised and sent a bill for £20 for every £100 they have saved, but with all this cash sloshing around buying goods and services the economy should be zooming along and the treasury should be raking in the revenues.

By lowering interest rates, this is what the BoE is trying to tell us, only not quite as extreme, but the result will be exactly the same only taking a little longer to filter though.

The cornerstone of economics (regardless of whatever flavour) is "supply and demand", there's always a physical limit to the supply of anything, and the more cash that's chasing this limited supply the more the price goes up.
Conversely, regardless of supply, if there's zero demand for something think 386 computer chips or AOL CDs, regardless of money supply, these things will still be worthless.