Thursday, Jun 21, 2007
Record number of homes changing hands
BBC News: House sales matching 1980s boom
"Some commentators believe that even if house price inflation slows further, the buoyancy of the economy and continued immigration will sustain the current demand for new homes."
"continued immigration"? Surely, they are not trying to blame the East European builders who came here because of the property boom for causing the boom in the first place!
Posted by royston @ 07:33 PM (178 views) Add Comment
5 Comments
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1. Davros said...
I see, a warning about the state of the economy, followed one paragraph later by a comment about the buoyancy of the economy.
2. Scott said...
This is no joke. San Fransisco employed thousands of overseas computing experts at the height of the dot com era. When the crash happened, San Francisco airport was full of cars with the keys still in the ignition.
I felt something similar here in London last Christmas. A lot of the people fly home for Christmas. Every day as I went into work in December, the streets were less and less crowded. On my last day in December before I went back home for a few days, you could even sit comfortably on the central line tube trains! If we hit a bad patch, we will notice it in the city.
3. Kaitain said...
"Some commentators believe that even if house price inflation slows further, the buoyancy of the economy and continued immigration will sustain the current demand for new homes"
Umm, yes, cast-iron reasoning there. House price inflation will slow in a world where cheap money isn't so cheap anymore. With higher interest rates, the debt bubble begins to unwind. People can no longer borrow as much to sustain their lifestyles, and are forced to (gasp!) start paying back some of the money they've spent that wasn't theirs. Lower consumer spending means fewer sales. Fewer sales means smaller turnovers. Smaller turnovers means fewer jobs. Fewer jobs means lower immigration and higher emigration (ceteris paribus). House price inflation won't just slow down in a vacuum; it'll happen at the nexus of a whole slew of interconnected phenomena. Mutual reinforcement on the way up, and a chain reaction on the way down. The only way immigration will continue at its current rates is if the UK's downtown is less severe than those of most other nations. Given the average level of indebtedness in Britain, this seems a vain hope.
4. Tara747 said...
Great post, Kaitain!
5. inbreda said...
well said Kaitain