Housing in many countries, especially Britain is no longer an investment, it’s now made up of three fundamentals; consumption, crime and concern. The general public getting on the bandwagon with cheap loans is consumption. The crime slot is taken now that over 40% of Britain’s housing stock is bought in cash with property used as an international laundrette to wash hundreds of billions and concern comes from savers who quite rightly think that the banks and government will steal their hard earned (low or negative savings rates), tax paid money that drives a reluctant middle class into becoming landlords.
Cheap loans will prevail but credit is drying up the world over. The criminals have stopped buying in over-heated Britain and even George Osborne, who has fuelled the bubble, is taking action against amateur landlords that make up the vast majority of property investors in Britain.
But don’t take my word for it. Predictions of a house price crash in 2016 are now mounting thick and fast, something unheard of in previous property recessions and particularly back in 2007 just before the last epic fall.
We kick off with consumption. The Week has a piece from Pete Redfern, the chief executive of Taylor Wimpey, Britain’s biggest house builder who says that “The UK is in a “borderline place” on home ownership as a result of rampant price rises and more needs to be done to rein in the pace of (property) inflation”. It also makes the observation that “London, where the housing market is becoming so detached from the wider UK that it has been called “another country”.
Then we have dodgy dosh from overseas; As RT reports – “Asian and Russian luxury homebuyers are deserting London’s property market amid economic uncertainty. Property buyers from Asia made up 26 percent of those buying homes in wealthy areas of London such as Kensington, Chelsea, and Belgravia in the first three quarters of last year. That figure has dropped to 6 percent according to figures compiled by estate agent Hamptons for the Financial Times”.