London property bubble

This post is written from memory, not research so bear with me. A few years ago I read a piece of research during te eurocrisis, which said that in the event of the Euro failing London property prices could fall by 50%. The reasoning was that our reputation as a stable safe haven, had led to people using London property to park wealth, and that in the event of the Euro crash which did not materialise, London would no longer be seen as stable. I think we can safely assume our reputation for stability is gone.

The London property bubble is structured in a very odd way and drags the rest of the country’s house prices. We have foreign money, the super rich, who own the very very Prime property in zone 1. We have a premium rental market around this, and its only when you get to outer zones you start to get mortgaged owner/occupiers. The use of London property as a safe haven has inflated this part. It is holding up a bubble in the rest of the country. Our housing market has been overvalued by a long long way, 50% at least for a long time. Our housing bubble is at the centre of most of our problems. We popped it. We don’t know yet that we did this.

Our banks have not been stress tested, as far as I am aware, for an event like this and I don’t know that we have fully considered the instability represented by RBS, and others, in thsi context. When this is combined with the exodus from our financial centre, I think we can safely say there is trouble in store., Its not trouble that can be solved by competent negotiation for Brexit because we already fucked that up by generating political instability post vote. This hasn’t become apparent yet. We have system failure in social policy systems becoming evident and only a small amount of time before htis instability compounds it. I think we might be in the shit in not know it. Thats what I think. I wanted to note here that I thought so.

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