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Eddie_George

It Is Time To Halt The Flow Of Money Into Property

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Paywall I'm afraid.

One of [the consequences of ZIRP and QE] has been in residential property. Low interest rates, high valuations among other asset classes and, most crucially, a perception that the sector has become “too big to fail” means that net equity is moving into UK residential property at a rate of £20 billion a year. Flighty investment equity has taken the place of more stable household debt. In turn, this has made the sharp withdrawal of capital from housing more likely should economic conditions deteriorate and investment returns begin to diminish.

By Simon French who is chief economist at Panmure Gordon.

http://www.thetimes.co.uk/tto/business/columnists/article4591348.ece

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Wow. So much bearish stuff in the media recently about the price of London property. I wonder if tptb are buttering everyone up for something?

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How is it thar economists always get cause and effect the wrong way round? The "too big to fail" decision was made by central banks and national administrations over 10 years ago. ZIRP, QE, and state subsidies to housing markets were policies that followed logically from that decision.

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Like a lot of articles involving Martin Wolf, the comments are a better, more analytic read than the article.

(Thats on the FT site).

He's ok but graduated from the school of retrospective insights with Adair Turner and everyone else. I think Bernanke makes a fair point about the fiscal side so it depends what you think Government and influence amount to.

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