Ah-so

Key workers' subsidised house purchases are are effectively a tax on those who do not qualify as "key". If the supply of houses for sale in any particular area is being sold to those who cannot normally afford them, it reduces the supply of housing for those who do not qualify. With more people now chasing a reduced supply of housing, the prices should increase. In other words, the non-key workers pay more so that key workers pay less. This looks and operates like a redistributive stealth tax. Last week I read an article about a curator at the Museum of London, who qualified as a "key worker" to get his first house. Huh? What definition of "key" are the (public sector) officials who decide these things using when they dole out tax-payers money? I wonder how long I would survive without the museum curator. I reckon it would be a lot longer than if all the shelf stackers disappeared from the supermarkets. Shelf stackers are actually key to my existance and I would starve without them. Life would grind to a halt without petrol pump attendents, but these people on menial wages do not get considered for subsidised houses. The public sector may do a lot of good, but is often smug, corrupt and unaccountable.

Of course the phone rings - it's people putting their houses on the market. I wonder what EAs do Monday to Friday while the rest of us are at work. Any ideas? Planning what BMW to buy next, maybe.

Could just be a coincidence, but Halifax, who have the biggest exposure to mortgages of any of the big banks, are offering the best rates to savers? Their latest saving scheme offers 8%! Why do they want money so much? I remember that BCCI also offered the best rates of interest on the market. Their could be something nasty lurking in the HBOS balance sheet... However, the banks know the risks if they lend too much, so it's their own look out. Likewise if you borrow too much. With a credit card, if you cannot pay it all back at the end of the month, you probably cannot afford it in the first place.

Is anyone going to buy any of Hometracks' GBP 15 reports now that all the useful information can pretty much be gathered from nethouseprices? What will they do apart from act as a mouthpiece for EAs? I also see that we now need to "register" with hometrack to get their free reports. Why? Any connection with the sudden huge rise in buyer interest at estate agents? They can only have done it to pass the details on to EAs.

The money markets have a rate rise priced in for the next few months. It should be pretty close to the election unless a lot of counter-inflationary data is released. The 5th May MPC meeting looks likely, coincidentally a likely date of the election! Supply and demand works perfectly in economics text books and usually in most markets. Housing is one where it can be very slow to respond. We are not in a crash yet, but a surreal stalemate. No one will buy at these prices and very few willing to sell below them. It is a market failure. Something has to give eventually. Just hope it is quick and not a Japanese-style 15-year property bear market.

I work in corporate insolvency, so have a vested interest in recessions. Bring on the recession!

In a global economy it is absurd to think that each country has to be based on heavy manufacturing. It was that attitude, based on our past industrial greatness that kept the UK down for so long. Just as once London never tried to compete with the regions in manufacturing on a national scale, we now see this on an international scale. Just as it is in our own interests to work in high-skilled, high-value work, so it is in the UK's. As the rest of the world rises, the demand for financial services (that we specialise in) will increase. Life as we know it cannot exist without insurance for example. You can't even drive a car. No modern economy will function without it. Nor without access to cheap capital, such as the bond markets. Both of these industries are centred in the UK and are likely to grow.

Tonight`s Evening Standard Homes & Property "Gossip" column (give me strength) has the following top property story: "Chelsea novelist and eco-toff Julia Stephenson [who?] is becoming a landlady. She has spent GBP 239,000 on a one-bedroom, first floor flat in Canary Wharf to let at GBP 250 a week through Frank Knight." So the rental return, before expenses and assuming it gets let at that price is 5%, just the same as she would get in a good savings account and worse than a bond portfolio (I doubt she needed a mortgage). Taking into account expenses and the fact that Frank Knight alone is advertising 73 flats to let in Docklands over GBP 250 p/w, the returns will be poor, suggesting she has not thought this little venture through very well. If she thinks Docklands is so great, why doesn`t she live there? Because it`s rubbish, which is why 73 others have empty BTL flats on Frank Knights books. If you can afford that rent, you would live somewhere normal. It certainly can`t have crossed her mind that her investment could lose money, but Docklands flats are just those that will (see newsblog). What led her to this? Boredom? Listening to her friends chatter? Too much Channel 4? Either way, it is another example of the last days of a bubble. She is probably convinced it is already worth 300k. Apparently she is the Vestey meat heiress and is standing as the Green candidate in Kensington and Chelsea. She has a somewhat vacant expression and dyes her hair blonde.

I think it will. I rented there from 1999 to 2002 as my first place. As it rose I had to　move on (to Streatham!). I think it was undervalued before, being well-position and 15 mins to Waterloo. Limited selection of pubs/restaurants, but the ones there are good. The prices are bound to fall withg everywhere else, but I think it will stay in demand. Earlsfield has arrived.

The agents know that everyone knows that it is now a "buyer's market" and that potential buyers are going to come in with offers 5-10% below asking price. With this in mind, they are pumping up the asking price in the knowledge that the offers will come in lower. Buyers will get the "low" offer price accepted and think they are canny neogtiators and getting a bargain.

Yes, they do on the surface. However, if you are born poor in America, your chance of going to college is about on a par with becoming President - i.e. zero. The American dream is a lie, most poor Americans grow up poor, stay poor all their lives and never get a chance to better themselves through education. Lucky ones might get a scholarship, especially if they are good at sport but those places are very limited. Ursa Minor <{POST_SNAPBACK}> It is true that an American's place in society is more likely to be governed by their birth than in the UK. However, to say that you have zero chance of going to university is nonsence. I personally know a black guy from the bronx, from a very low-income family, who went to Stanford. Another girl, brought up on a trailer park by her mother (father desceased), who made it into Berkely. I know that they both had help due to their low income, but they also had big debts that they were paying off. They were bright enough to make it and the banks were there to lend them the money. Miss Berkely has just brought her first house, something she has dreamt of her whole life.

If you are bright enough to go to university, you should be bright enough to earn more and pay back your debt. The Americans seem to manage.

Excellent point. There is hardly any point in speculating on the trigger, it will always be something different. And you cannot expect the unexpected. Most people are unable to comprehend this and can only work using the previous example, in this case that high inflation lead to high interest rates which triggered the housing crash. Therefore, low interest rates means no crash. Nonsense. Not only could the trigger be something else, we do not need a trigger at all. Japan's own housing bubble peaked in 1990 and yet no trigger started the falls. There has been no major recession, no major unemployment, yet year on year land prices keep falling. Prices are now half what they were 15 years ago. All the arguements put against a decline in prices (shortage of property, high employment, low interest rates, no recession) are completely disproven by the example of Japan. Yet there was also never a "crash" in Japan, just a slow slippage. And as the similarites mount up with the UK, I wonder whether we might be on for the same fate. This is in no one's interest. A short crash/correction now would be better for everyone.