Monday, 7 January 2008

The secret crash

The commercial property crash in the UK's secret crisis. Prices are tanking, and the banks, who are up to their neck on commmercial property loans, must be in a state of red-eyed sleepless panic. Things are bad out there.

Consider this short story from Bloomberg:

"LaSalle Investment Management put Condor House, a seven-story office building facing London's St. Paul's Cathedral, on the market for 130 million pounds ($256 million) six months ago. The building sold last month for about 117 million pounds, 10 percent below the asking price."

Think how a 10 percent decline in asset prices would affect the value of loan collateral. Peter Hobbs, head of a real estate research outfit based in London neatly summed up the situation:

"The U.K. market is falling apart. There's a risk that this cyclical downturn turns into something worse."

Something worse? What could he be thinking about? Could he be thinking about a banking crisis?


Dirty Digger said...

"House prices rebound unexpectedly 9:32am GMT LONDON (Reuters) - House prices recovered in December after three consecutive monthly falls, a survey by the country's biggest mortgage lender showed on Tuesday, easing fears of a precipitous decline in the property market."

Um, looks like your crash thesis has just developed a nasty leak...
Never count out the UK property market.

Anonymous said...

yeah yeah yeah..... and oh, don't look but there's a 650 trillion dollar flying derivatives pig.

In other news, gold is up again and my krugers have now doubled in value in terms of tinkerbell pounds - bring it on!