Thursday, Oct 25, 2007
It's all about ROI for BTL Investors
The Times: Exclusive: My golden secret about property prices
If the return on investment plateaus, investors will sell and look for alternatives (if any can be found of course). In the housing market this will precipitate a crash through over supply, over inflated prices and current loss of confidence. Commentators use the supposed housing shortage as the saviour to prop up demand and prevent a US style crash. Wait until the BTL investors unload because they aren't seeing a return, causing the rest of the pack to panic. That should remove the housing supply shortage argument. Incidentaly, savvy investors sold their housing portfolios up to a year ago - it's the naive investors, as with any bubble, who're going to get caught.
Posted by jonathan @ 10:35 AM (444 views) Add Comment
4 Comments
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1. Davros said...
He's right.
This boom is far more to do with sentiment than economics. Why do you think the pundits get their predictions wrong every year?
2. confused76 said...
good article
3. bidin'matime said...
He doesnt quite compare himself to the little boy in the Emporer's New Clothes story, but nearly. This is what we need - more comment from people who don't have reputations as economic commentators to worry about...
4. An Bearin Bui said...
Parris is right: most strict economists do ignore sentiment as a factor in market booms when in fact it's the key factor to all booms. Political economists, who work in the crossover area between hard economics and softer-focus politics, do recognise the importance of sentiment in determining manias and bubbles but it's rare to read economics commentators focusing on it. It just doesn't fit easily into any statistical model so they just ignore it. Speculative excess is the key hallmark of a boom and this one is no exception.