banished

Well, Kensington and Chelsea still has steady , if not, rising prices. There is such a shortage of houses on the market that it isn't going to get better. Flats are selling much higher than last year. Even if it were to drop it would have to by a huge percentage to get to a 'reasonable' level, whatever that is in such a booming city. For Russian, Middle Eastern and asian investors there is no comparable city to London. New York is not exactly as friendly out of 2 of those 3 groups. The rest of the cities in Europe do not hold a candle to London. Granted Brent, Tottenham etc may see price declines but not the prime areas. Even if they decline it wont be by much. Globalisation at work. Make the money elsewhere and live where its nice.

It seems the MPC will drop rates when 'necessary'. Is it beyond the imagination that they could prevent a drop in house prices by flooding the money with cheap money, alomng with a negative real rate for borrowing?

I love the aggression The water levels have been lowered before and then interest rates were cut and the water rose again. Gordon will not let his 'good work' go to waste and will drop the rates (sorry - influence them). Regardless of whether it work or not overseas buyers will always buy into London as its 'the place' to be. NYC has lost its shine and Russians, Asians and Arabs like it.

London's yield is very low at the moment and the rents are breaching the limits of affordability. However, there is full employment and alot of foreign buyers, especially from Asia, Russia and the Middle East. It may stagnate but how can it fall when you have so much money coming in. Outside London is a completely different story.