Friday, October 26, 2012

Britain’s biggest economic disadvantage – our property market

Britain’s biggest economic disadvantage - our property market

Despite technically emerging from recession, Britain's economy remains paralysed. And it's down to one thing, says John Stepek: house prices.

Posted by martingreen @ 02:31 PM (1715 views)
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4 thoughts on “Britain’s biggest economic disadvantage – our property market

  • In USA they have written off loads of their duff mortgages, so are recovering faster.
    UK is following Japan.

    Only small proportion of UK homes is overhung with rotten debt. If we can get a few repo’s to kick start a downward revision, then the zombie properties will be outsold by fairly priced ones.

    QED

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  • That is true enough. King, in the face of deflation he lowered interest rates, fair enough. But this froze the market both for zombie companies and zombie households, preventing any profitable loans from being made or requested privately, this then pushed the government into the dangerous expansion of the public sector. Like Japan.

    IF on the other hand King had raised rates he would have forced the market to clear, and people would have been happy to borrow but that would have required banks be capable of accepting losses, they weren’t and are not. The sad thing is the compromise won’t work for the UK, because we -lived- on credit and imports. So in the end we will have the suspended losses of the frozen banking sector PLUS the debt of government.

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  • I thought this was the most telling point in the article: “In Britain, house prices are the single most important economic indicator, politically speaking. When house prices are falling, governments lose elections.”

    So it’s not because of Labour or the Conservatives, it’s down to us. There you have it, it will take years. It makes no difference who you vote for, they naturally won’t shoot themselves in the foot. We need much more social housing with modest rents to put downward pressure on house prices. Will that happen?

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  • I think the author needs to re-title the article with : “South East’s biggest economic disadvantage – our property market”.

    Until it is recognised that there has been too much emphasis [by successive] in creating jobs in the South East, specifically London, then
    this country’s economy is going no where. What Britain needs is a similar tax model to Switzerland, using regional cantons to attract business.

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