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U.K. Hometrack House Prices Fall the Most Since 2001

by Brian Swint

(Bloomberg) The average cost of a residential property in England and Wales slipped 4.4 % in July from a year earlier to 168,500 pounds ($336,000), Hometrack Ltd. said. Prices fell 1.2 % from June. “With no immediate end in sight to the current uncertainty, activity levels are likely to remain suppressed with prices remaining under pressure into the autumn,” said Richard Donnell, director of research at Hometrack. Prices “are now back to levels last seen in October 2006.” Demand for housing has declined 20 % in the past three months, Hometrack said.

Note how much higher prices are vs the US.

It’s another case of going up very fast and now working its way down towards a more historically normal trend line.

But as in the US, they never come down quite that far before turning up on a new path from a higher base as much of past ‘inflation’ remains indefinitely.


4 Responses

  1. So, do you ignore “financing considerations” and just focus on the raw historic price tags?

    Marginal home purchases are typically debt financed. If mortgage interest rates are rising (and property taxes), it implies that the home prices would have to fall further to achieve the historic trend line of payment affordability … or is that just noise?

    Also, I’m curious about the statement in the top left of your homepage:

    “The financial sector is a lot more trouble than it’s worth.”

    Is this a statement implying negative value of the sector or just a statement of disgust? or???



  2. Financing considerations matter, but other factors generally matter more.

    Also, prices rose more than the US but interest rates weren’t as low.

    Incomes can rise sufficiently to support higher prices even with higher interest rates.

    I see little or no real value to the financial sector. It exists largely as a result of institutional structure created by Congress over time.

  3. That raises an interesting question: what would Warren Mosler’s ideal financial sector look like? Sure, most of what the current industry does is counterproductive waste, but there is a core (usually the boring parts that the losers from second-rate schools are shuttled off to like “project finance”) that actually server real purposes. How do you separate the bad from the good?

  4. haven’t thought it through

    probably just banks with no secondary markets and no interbank markets

    all funding would come from the fed

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