The furore over banker bonuses doesn’t take one thing into account. UK house prices have been propped up by banker’s spending. The London market was super-charged by the bonus season as bankers cleared funds in the winter ready for a spring flutter on a 5-bedder in Islington or something a bit fancy in Epping Forest.
The shape of the recession graph may mirror house prices. If so, are we at the bottom yet? With sterling 30% off and property down 30% too, foreigners (with foreign currency) now have financial muscle that almost doubles their purchasing power. Get in, boys…
The FT reports that derivatives based on the Halifax index are pricing a further 32 per cent fall in property values – a 46.7 per cent peak-to-trough over the next two years.
What shape the recession graph? It’s still a nasty downward rollercoaster. So, while I’ve been calling an “L”… it looks like we are still on the down line if you’ve not already gone splat on the flat.