The first point needs little comment. The London market is crashing and everyone knows it. The numbers are stark; prices down 10-20 percent, with volumes down 50-60 percent. That means grim pickings for london estate agents.
The second point recognises that the "super-prime" market is on the turn. However, Frank Knight thinks that volumes will continue to hold up. Dream on, Frank. This crash is all about wealth compression. If you will allow me to overload on adjectives, the rich are getting poorer much faster than the poor are getting poorer. The rich have just seem massive falls in equity prices; and those high end sales neeed buyers who can really deliver the cash on settlement day. That means the wealthy need to have some serious wealth to make the transaction go through.
As for the third point, next year's bargain hunter will be a superprime loser in 2010. Recession means lower incomes and more unemployment; rental growth follows wage growth, and the numbers are going the wrong way for buy-to-let.
Besides, quoting rental yield is a little misleading, what really matters is total yield, which is rents plus capital gain/loss. Putting it in simplier terms, why would anyone want to own a property when rental growth is likely to be flat or even negative, while the price of the asset is almost certainly going to fall. It is a template for losing money.