Textbook, textbook!
If you can't be bothered reading the whole article in today's FT, here's a summary:
a) 3.3% fall in house prices, year 2007 to date.
b) 10% fall in land values (period not specified), and
c) 1.4% contraction in economy in second quarter 2007.
It'll be us next! Things in the USA are this bad already, Spain is heading the same way. Anybody who says otherwise is deluding themselves. Northern Rock? You ain't seen nothin' yet.
Tuesday, 9 October 2007
"Property party over as Ireland's prices fall"
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4 comments:
The difference in Spain, Ireland and the US is that they have been building new homes at a rate of knots. We have not.
Ed, that is a very interesting point (which I have mentioned before), but do not forget that there are between 500,000 and 1,000,000 empty homes in the UK (including second homes and buy-to-sellers) and another 1,000,000 three-beds occupied by single pensioners.
The flip-side is the observation that rampant construction in those countries over last five years has done nothing to dampen the price bubble!
Both points are true.
I wonder whether those pensioners and second home owners will dash to sell once prices start falling though. Presumably they will hold onto their assets unless their personal circuumstances prevent it.
No of course there will be no rush to sell, they are only paper losses.
But in the interests of discouraging such bubbles, I think a whole raft of taxes should be replaced by a Land Value Tax, that would act like a higher interest rate on land values and thus dampen house price/credit bubbles in future.
Which would also encourage second-homers and such pensioners to sell up or trade down.
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