16th July 2014

Are falling sales the first signs of a predicted slowdown, here and here? It is not surprising as the temporary pick up given by London's housing boom runs out of steam. It could not be otherwise as without sustainable growth elsewhere increased housing costs are always going to reduce other spending.

Elsewhere the The Great Property Race was aired Friday a BBC Inside Out production that shone a light into the capital's housing boom. Besides the staples of such television of following the fortunes of new home buyers, they reviled that the winner of a closed bid offer still lost out when the seller withdraw to put it on the market again to push the price up by a further 10%. However a large part of the programme was devoted to overseas buyers mainly from Asia who have entered the market. Hong Kong where apartments have never been particularly large or cheap has been experiencing its own boom to the point that London looks cheap. But rather than buy to rent these investors prefer to keep them empty, a case of hot money if there ever was one.

However we have been here before. Following Japan's spectacular property boom of the 1980s it is stated that value of Tokyo real estate was equivalent to the whole of the US and Japanese too went on a spending spree paying over the top prices, and we all know how that ended. With so much hot money this has all the signs of a bubble and if there is one lesson for those desperate to get on the housing ladder, it pays to be patience.

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