Wednesday, March 7, 2007

Evan Davis talking about the madness of crowds.

Economic froth

"I’m getting a little worried that the UK economy has overheated a bit and is getting frothy. Should I be?" also he mentions a new breed of property speculator - Buy to Sit???

Posted by sam @ 10:20 AM (555 views)
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7 thoughts on “Evan Davis talking about the madness of crowds.

  • george monsoon says:

    Where do they find these people?

    Who on earth would buy a property and let it sit idle?
    Lets look at a few analogy’s

    like buying an icecream and watching it melt.
    Like buying a new carpet and covering it with that silly plastic matting.
    Like buying some bedding plants and leaving them in the tray…

    Need i go on?

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  • tyrellcorporation says:

    Trouble is they see it as buying an art student painting in the hope that the student finally makes it into the Tate Modern (Rather than a receptionist at Tate & Lyle!)

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  • bidin'matime says:

    I’ve heard first hand evidence of this locally – so-called BTL being put up for a rental that it cannot possibly achieve, so that the mortgage interest can be set against future income from other (let) property owned by the same landlord. In the meantime, he’s hoping for a pure and simple capital gain – why let tenants come in and trash the place?

    The good news for us is that this all points to a far more volatile market – as Davis points out, this is creating a false shortage of supply, which (unlike the time it takes to build new properties) can be put back into the market, either as rentals or sales, at the drop of a hat.

    It also puts paid to the claim that they are ‘in it for the long term’ – even if we estimate that tenants knock 10% off the value in return for a 3% net yield, it still makes sense to let it out, unless you are planning to sell within 3 to 4 years. These guys aren’t BTL landlords – they are what the Yanks call ‘flippers’ who will be out in a flash when things start to look sticky.

    This is (another reason) why it wont take a big jump in interest rates to crash the market – as demand slows, supply will increase and prices will fall. Then things will simply snowball as sentiment turns against property and the ‘smart money’ moves elsewhere. It’s just a matter of time…

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  • Waitingfor Hpc says:

    Inflation beaten – not like the 80’s – well in the 80’s the BOE & ONS told us the truth!
    Credit card debt slowing? mmmm where ? I do not see it? and debts are still at record levels!
    More optomism from the BBC – keep it up!

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  • I turn the T.V. off whenever Evan Davis opens his mouth and starts drivelling.

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  • Northern Lad says:

    2 properties directly behind us have been bought and renovated and have sat idle since October.

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