benmorg Wrote: ------------------------------------------------------- > ibilly99 Wrote: > -------------------------------------------------- > ----- > > we're back to the bad old days of how much is > your > > house worth dinner parties and property porn on > > all the channels WTF is going on .. meanwhile > > Greece burns and money is magicked out of thin > air > > there is something disquieting about it all - > > rather like folk in Thailand going out to pick > up > > the fish just before the tsunami... > > I agree. The financial crisis was caused by the > house > price madness, so a return to rapidly rising > prices is a return to madness. London is in a bit > of a bubble at the moment, propped up by monetary > stimulus. Easily mistaken for a bullet-proof safe > haven. 'Monetary stimulus' is only part of the story. Mortgage lending is still incredibly low by historic standards. Mortgage rates are pretty low but remain substantially disconnected from the BoE base rate. The key issue in my mind is that the market is so small, especially in terms of available property, which means there are enough cash rich people out there to sustain the market. Unemployment remains relatively low considering where we are in the cycle and there are still very few forced sales. In this environment it's easy to see how prices continue to rise. This could potentially send a signal for more people to try to sell over the next few months, causing prices to moderate, but I still think that most people are in a position where they have to stay put given that it remains very difficult to borrow money.
