Thursday, Feb 23, 2012
Hubble, Bubble, Toil and Trouble?
Guardian: House prices bubble swells in London
"It beggars belief that with unemployment at 2.7 million and nearly a quarter of 16- to 24-year-olds on the dole, economic growth close to zero and real incomes falling, and after the banks suffered a near-death experience, that any part of the country could be experiencing a property boom. Alas, it is happening". "In Herne Hill, the "pristine pad in a perfect locale" was a tenanted flat in ropey condition, with damp on the walls and a broken pipe spewing grey washing machine water over the garden. The agents were marketing it as perfect for an investor to let out straightaway. Sometimes buy-to-let really makes you want to vomit".
Posted by alan @ 10:56 PM (1457 views) Add Comment
7 Comments
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1. Mrmagooisagovteconomist said...
Why the surprise, the inflator is foreign investment for what ever reason !
2. dill said...
"Young adults and families are furious that the property market has turned into a stitch-up between well-off baby boomers and buy-to-let landlords."
And rightly so.
That hideous individual Cameron had better stop telling a betrayed generation that they have obligations to a system that, deliberately and hypocritically, denies them, or risk civil war in the long run.
3. hpwatcher said...
I've been looking in North London, and the prices really haven't changed that much. Obviously if something really nice comes along, people will move....but it's just amazing the prices have held. Should not be happening.
So it seems that the Conservatives are continuing with the same Labour trick of keeping house prices high so people think the economy is doing well.
Mass delusion on a grand scale - UK will never be able to compete with the rest of the world, when the cost of living is so high.
4. alan said...
Dill,
I agree, the divide between the haves and have notsin the property market is becoming noticeable. Its a legacy of what has gone before. My children have discussed it with me. It seems to be leading to a lack of motivation in the younger generation and an "up yours" from the older generation which isn't good for the country.
I retired last week. I guess I fall (by age category) among the boomers - I feel a bit embarrassed by this. My sympathies are with the young families.
Meanwhile the government of the day keeps up the "mass delusion" so everyone feels good, even when it hurts the country. I agree with hpwatcher.
5. sibley's b'stard child said...
Strange one really, yes it's all anecdotal yet most London Boroughs are still largely +YoY. Plus, the imminent end of the SDLT holiday won't have a great impact as 250k would fetch very little inside Zone 3 which won't account for the alleged pick-up in business. On the other hand, most of the locations listed (bar perhaps Walthamstow which is a hole) are sought-after by the middle-classes that can't afford Zone 1 ie Wandsworth, Dulwich & Herne Hill. Maybe it's simply the case the despite transactions in the doldrums there are still enough would-be-buyers with a sufficient income, BOMAD, greater fools (or all the above).
6. letthemfall said...
The fundamental problem is rising inequality, a rapid transfer of wealth from the majority to the minority, reversing the progress that began after WW1. The situation with housing is just the most obvious manifestation of this. It is not even about baby boomers vs the young (there are some wealthy young people too - bankers are mostly young - and many poor retirees): this is the forces of conservatism at work, and our recent govts have been either controlled by them (in the case of the last) or rampant champions (in the case of the present). So in the case of housing, in the south we are seeing ownership gradually concentrate, just as in the distant past.
I don't think there is any govt trick to maintain high house prices; these are a consequence of broad economic policy and imbalance. The real trick is to disguise and dress conservatism such that those who suffer are fooled into believing that it is to their benefit, using diversions such as attacks on public sector costs (which benefit the least wealthy), attacks on the redistributive policies of the last govt such as tax credits, fanciful excuses for excessive pay (companies fleeing the country) -- all shouted loudly through the media, especially the tabloid papers. And unhappily it seems to work, as some comments on this site testify.
7. Cycle7 said...
Alan
I totally agree, but as with all markets and bubbles, this will terminate in time. We are going through a period of change and maybe property ownership may not be the answer. It wont be long til the majority rent rather than own and that will have an enormous effect on the market. The wealthy overseas purchasers of central London will have to sell one day and I imagine at a loss. The insanity of the past 10 years has got to be balanced out and although its painful the correction will take place. Interest rates will rise and prices will fall its purely a matter of time.