Tuesday, December 4, 2007
I think LL TSB is missing the point. The 2006/07 recovery was fueled by the credit conditions which will not repeat. Yes, it was different that time!
"This relatively low rate of interest will, in our view, mitigate the potential fall in house price inflation in 2008, even with the credit market turmoil in full swing. And this is a key reason for not panicking; there is ample room for monetary policy to respond to the coming slowdown." I would perhaps agree with this were not for the dominant role of speculative demand in the market, which will make the price swings much larger. At the end of the day the 3.5x salary price average needs to be restored