Report There's Something In The Air. in House prices and the economy Posted March 6, 2007 "If I remember right there was something in the air in around this time 2 years ago"Maybe, but I wasn't so interested in the market then, and I certainly didn't know as much as I've learned here. However, I don't ever recall so much discussion and public awareness of HPC until these last few days. Everything was falling nicely into place in 2004 and into 2005. If I remember correctly 5 base rate rises took rates from their post 9/11 low of 3.5% to 4.75%. Throughout 2004 the brakes went on and, finally, in 2005 falls started to happen properly. I know of properties near me that sold in 2005 for 100k less than their original asking price in 2004. But then the pillocks in the BOE decided that we were perilously close to a recession - remember all the hoo-hah in the press about falling consumer spending - don't forget our economy is kept afloat on constant borrowing - and they dropped interest rates in August 2005 to 4.5%. My observation is that nothing happened up until Christmas 2005 but the minute 2006 started - it was as if someone took the cork out of the bottle. Houses that had been on the market for a year sold at full asking price and a big backlog of properties all got sold in the first few months of 2006. The three recent rate rises are just beginning to bite (I think). I notice lots of property now seems to be sticking. My comments are London and South-East centric - and ignore the nutty Central London market where even ordinary houses now cost quite unbelievable sums of money. Sums that are completely disconnected from the mainstream economy.