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Olympic lull contributes to largest ever August price drop

 

DATA

August 2012 was £236,260, down 2.4 per cent from £242,097 in July.

London: £454,875, -1.2% from Jul'12: £460,304,

 

This 2012 decline, is also the biggest TWO MONTH drop since 2003

 

August drops : Jul-Aug : SON&D : 2ndHalf / Lon-2H

2003 : +0.0% : +0.44% : +2.89% : +3.35% / +0.60%

2004 : - 2.0% : - 0.84% : - 1.35% : - 2.18% / - 4.87%

2005 : - 0.2% : - 1.19% : - 0.05% : - 1.24% / +1.86%

2006 : - 1.6% : +1.23% : +3.60% : +4.88% /+12.65%

2007 : +0.6% : +0.90% : - 3.76% : - 2.89% / - 0.84%

2008 : - 2.3% : - 4.07% : - 5.23% : - 9.08% / - 1.83%

2009 : - 2.2% : - 1.62% : - 0.58% : - 2.20% / +0.32%

2010 : - 1.7 % : - 2.32% : - 4.23% : -6.46% / - 4.97%

2011 : - 2.1% : - 3.68% : - 2.50% : - 6.09% / - 0.93%

2012 : - 2.4% : - 4.05% : ? ? ?

=====

 

The average drop for SON&D is -1.24%, so we may be headed for a 5% drop (or greater) in the second Half of 2012.

 

/see: http://www.rightmove.co.uk/news/house-price-index/august-2012

 

If you can accept that the Olympics effected Mainly London, it may have saved that market from a bigger drop.

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Another builder raking it in <_<

 

Housebuilder Persimmon has reported a pre-tax profit rise of 65% to £98.7m for half a year to the end of June.

 

It compares to £59.7m for the same period in 2011.

 

The company also said revenue was up by 13% to £806.7m.

 

Commenting on the results, chairman Nicholas Wrigley said the strong performance means the company is on track to deliver £6.20 per share to stakeholders over the next 9 years.

 

http://uk.finance.yahoo.com/news/housebuilder-persimmon-sees-profits-soar-064822702.html

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Olympic lull contributes to largest ever August price drop

 

DATA

August 2012 was £236,260, down 2.4 per cent from £242,097 in July.

London: £454,875, -1.2% from Jul'12: £460,304,

 

This 2012 decline, is also the biggest TWO MONTH drop since 2003

If you can accept that the Olympics effected Mainly London, it may have saved that market from a bigger drop.

 

But then, the bounce back....

 

Mortgage lending rebounded in July, lenders sayCML's director general Paul Smee: "We've seen a see-saw effect all year but the market is flat"

 

 

Total mortgage lending bounced back in July, according to the Council of Mortgage Lenders (CML).

 

Lending to house buyers and people remortgaging rose by 8% from June to the highest monthly level this year of £12.7bn, with the figure up 2% from the same month last year.

 

 

http://www.bbc.co.uk/news/business-19316713

 

Closer inspection reveals a broadly flat market it seems.

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Is the Peak Profits Party Over ?

CAUTION FLAG hoisted for Bears

 

Peak profits maybe?

== ==

 

BDEV may not be a good predictor of the prosperity of your friends firm,

but it has worked reasonable well for the UK and London property market

 

BDEV-chart

bdev.png

 

BDEV: 152.20 +3.20

Open: 149.30 / High: 152.60 / Low: 148.40

 

So what did we see yesterday ?

 

A nice dramatic reversal in Persimmon

(Har-de-Har-Har = a full-throated chortle)

 

PSN : 697.00 - 8.00P / -1.13%

O: 705.00 / H: 717.00 / L: 678.75

Vol.: 2.05 million

 

BDEV : 153.40 +1.20P / +0.79%

O: 153.00 / H: 154.40 / L: 152.20

Vol.: 4.55 million

 

Will BDEV follow PSN down today / Wednesday?

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After threatening to breakout to the upside (on big profits)

 

BDEV ... update

84916307.png

 

UK BUILDERS may be signalling that something Bearish is underway

 

Is the Peak Profits Party Over ?

So what did we see yesterday ?

A nice dramatic reversal in Persimmon

 

Will BDEV follow PSN down today / Wednesday?

Looking Good, Bill Ray !

 

BDEV : -3.78%

 

PSN- : -2.01%

 

Ch-ch-changes !

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I posted this in reply to Moneyweek's recent article:

http://www.moneyweek...-property-23100

 

76. Van

(22 August 2012, 11:02AM) Complain about this comment

 

I've thought quite long and hard about this, and have concluded that this model unfairly represents the bull case.

 

you have to remember that for -£1k/year, you will own the house at the end of your investment. That's £25k outlay over the life of a mortgage, and for a return of £165k (assuming flat prices).

 

By contrast, if you pay 1k into a year into a REITS vehicle returning 5%pa and compound it over 25 years, you end up with just £48k after 25 years. The BTL still wins, thanks to the leveraging model.

 

 

But, tilting it in favour of the bull case, we know that we live in an world where central banks create inflation, and it's highly likely that the nominal price of the average housing will be higher than £165k at the end of the mortgage term, even despite their current modest (real term) overvaluation. And, as we have seen, rents are still under increasing pressure, so there is some firm support underpinning current prices.

 

 

 

Agree/disagree?

 

 

Factor in even some modest inflation and the numbers really start to rack up in your favour and you can make many times over your £25k outlay.

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I posted this in reply to Moneyweek's recent article:

http://www.moneyweek...-property-23100

 

 

 

Agree/disagree?

 

 

Factor in even some modest inflation and the numbers really start to rack up in your favour and you can make many times over your £25k outlay.

 

Had a quick look.

 

Does he include the 40% deposit or the posssible change in interest rates?

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I posted this in reply to Moneyweek's recent article:

http://www.moneyweek...-property-23100

Agree/disagree?

Factor in even some modest inflation and the numbers really start to rack up in your favour and you can make many times over your £25k outlay.

To get from Gross Yield (cf. 5.20%),

to Net Yield, he takes off 1.60% = 3.60%

And then he subtracts 20%, for an After Tax return of 2.90%.

He then assumes a 5% mortgage interest rate, to arrive at a negative return.

===

This is unrealistic.

In a time of financial repression, it is tough to find a reliable return as high as 5%,

so borrowing less, and getting a lower interest rate makes great sense.

 

Also, if you live in the property, you eliminate some costs:

+ The void period

+ The agents fee for renting it

+ The tax

 

With these amounts added back, the investment looks much more compelling, especially if you think rents will rise.

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Stimulus Hangover About to Begin (in the US)

 

8-22 Housing…The Stimulus Cycle is over. Let the hangover (triple-dip) begin

by MARK on AUGUST 22, 2012

 

Housing saw its stimulus peak in q2. Now for the year+ long hangover / “triple-dip” trade.

 

Rates, sentiment, and prices – in aggregate — have never been better and YoY comps never easier to beat – comping against a stimulus hangover/double-dip year — and still July Existing Sales was only up 2.3% YoY. For the remainder of the year – and through July 2013 at least — YoY comps will be negative, as last year’s Twist ops and lack of rain/snowfall benefit turn into a headwind.

 

Bottom line, this year’s housing stimulus cycle (once again mistaken by WallSt, the media and bloggers for a “durable recovery” with “escape velocity”; a full blown “recovery” without ever stopping at the bottom for a while) is now over and the stimulus hangover begins. This is a repeat of the 2009/2010 home buyer tax credit stimulus cycle followed by the 2h’10/1h’11 hangover/double-dip.

 

 

 

The Sad Part About This

 

The sad part about the upcoming stimulus hangover / “triple-dip” event is that it didn’t have to turn out this way. The Fed did its job. By creating negative real yields and forcing mortgage rates to levels that not only forced first timers in all at once (very much like the tax stim of 2010) but forced institutional investors into rental property investment in search of yield, they created more than ample demand.

 

But the relentless bank and gov’t foreclosure kicking can kicking – banks in order to kick losses and gov’t to get re-elected – on the 5 to 6 million ”rolling” distressed loans IN ADDITION TO the re-leveraging of 5 to 7 million high-risk legacy loans into higher risk / leverage new-vintage loans (aka loan mods) took away millions of units of supply that would have otherwise been purchased by first timers and investors over the past year.

 

In short, if foreclosures and short sales had been running at 2+ million a year like they should have been all along house sales would have been 50% to 75% greater this year, “escape velocity” may have been reached, and this would have gone a long way into the ultimate de-leveraging of 20+ million legacy years homeowners that needs to occur before this housing market ever finds a “durable” bottom.

 

But because it all continues to be about can kicking, housing will go into a ”triple dip” in the next couple of quarters, which will last a couple of quarters at which time rates will be forced under 3% in order to recreate the same conditions that came on 3.5% this time around.

 

Bottom line, the never ending cycle of stimulus boomlets (always confused with fundamental economic “recoveries”) and busts continues.

 

http://mhanson.com/archives/1013?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+MarkHansonAdvisers+%28Mark+Hanson+Advisors%29

 

If you're not familiar with this guy, he's been spot on for many years, including pre-bubble burst.

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"housing will go into a ”triple dip” in the next couple of quarters"

 

So the US Property Bust... is not yet over

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The bubble locked a generation out': Minister admits housing crisis as builders profit by targeting affluent South

 

Read more: http://www.dailymail.co.uk/money/mortgageshome/article-2191734/CITY-FOCUS-We-longer-afford-ignore-housing-crisis.html#ixzz24LsxGWRJ

It is a headache for the Government and ministers are only too aware that the NewBuy programme to help first-time buyers get on the housing ladder and the Funding for Lending Scheme aimed at boosting mortgage lending are not enough to kickstart a housing boom.

It’s ridiculously expensive for people to buy houses in this country,’ said Housing Minister Grant Shapps.

‘The housing bubble locked a generation out. I’m in complete agreement there’s a housing crisis.’

. . .

We are very pleased to get ourselves in such a strong position.’ But despite the bullish updates – which have been echoed in recent months by rival builders including Barratt Developments and Taylor Wimpy – experts reckon just 100,000 homes will be built this year.

 

‘We haven’t been building this few houses outside wartime for 100 years,’ said Bovis boss Ritchie.

 

The big problem is mortgages – or the lack of them – and the men in hard hats say they will only build more homes if they can sell them and that means freeing up the mortgage market. It is a view shared by Shapps.

 

‘You can’t solve this by building homes that no one can afford to buy,’ he said. The Government introduced NewBuy last March to protect banks against losses if they offer mortgages to buyers with only a 5 per cent deposit as long as they are buying new-build houses.

 

Dim politicians !

Look at the chart:

article-2191734-14A418E4000005DC-204_634x648.jpg

 

The problem isn't MORTGAGES - it is that at current levels of LAND PRICES, there is only one easy way to make money...

 

Why take the risk of buildings loads of New homes all across the UK, when you can make better money selling homes branded as London "Prime" in 2nd-tier locations to gullible foreign buyers - who then just rent them out to house-hungry locals. They will keep on buying until they discover their fingers are getting burned.

 

It is time for some SHOCK therapy.

Take The Hit that should have been taken long ago, as the USA and Ireland have down.

 

ALLOW home prices to Go Down!

That will push land prices lower, and allow surviving Builders to replenish their land banks more cheaply, then they can get back to doing the business they should be doing.

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Correct, Doctor.

Terry Smith also hitting nails on head like the expert chippy he is (Chippy. sl - Fast food outlet or carpenter).

 

http://www.terrysmithblog.com/

 

Short EXCERPT

====

I suppose I also shouldn’t be surprised that both the government and Alastair Darling put forward housebuilding as one of the solutions to this problem of a lack of growth. Neither seems to have considered the following factors:

 

1. An obsession with home 'ownership' (with a 100%+ interest only mortgage-hence the inverted commas) was part of the cause of the financial crisis;

 

2. In the most successful economy in Europe-Germany-less than half the population own their home; and

 

3. No one has ever managed to export a house.

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"No one has ever managed to export a house"

 

TRUE

But the next best thing is getting a bloody foreign to buy your overpriced new stock, since the loss will then go overseas, and the property remains at home, as available supply.

 

It is a sophisticated Con Game, that has been played for years.

But eventually, the suckers figure it out - But maybe not until after the losses appear.

 

The latest Galliard project being brought to HK

 

Crescent-EDM---CBRE-1-01.jpg

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"No one has ever managed to export a house"

 

TRUE

But the next best thing is getting a bloody foreign to buy your overpriced new stock, since the loss will then go overseas, and the property remains at home, as available supply.

 

It is a sophisticated Con Game, that has been played for years.

But eventually, the suckers figure it out - But maybe not until after the losses appear.

 

The latest Galliard project being brought to HK

 

Crescent-EDM---CBRE-1-01.jpg

how rude! to suck foreign investors to buy poor property investments to prop up values? How sad you are to encourage foreign funds to support your failing real estate market to prop up values. What scum you are! What morals do you have?

UK is a shithole full of bastards I hope Europe drags you scumbags into reality!

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Increasing mortgage costs are a very significant headwind for the UK housing market.

Santander are rasing their SVRs:

 

 

http://www.dailymail...es-SVR-0-5.html

 

More than 400,000 Santander customers paying the standard variable rate (SVR), which homeowners move to at the end of a fixed or tracker deal, will be affected by the change.

Halifax, Royal Bank of Scotland, the Co-operative, the Bank of Ireland and the Clydesdale and Yorkshire banks have all already raised mortgage rates for customers on standard rates this year.

 

The bank is Britain's second biggest mortgage lender with 17 per cent of the market, according to Council of Mortgage Lender figures for 2011.

 

 

 

 

 

 

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I just happened to notice the first post on here by gold finger claiming "hold on to your hats were going down"

for those that have not noticed it, that was four years ago and lets be honest what has really changed

and .2 drop .3 rise .4 drop .2 rise .......(although I did notice a big fall in Aug) Its not gone anywhere yes by haliwide or some other measure but not on the street it hasnt.

 

I am the longest bear of them all I wont embarrase myself by telling you all when I first said to my then G/Friend now wife, I dont think we should by a house as they look a bit overpriced my dear!!! What a prat I look now ! How much rent ive spent and more importantly how many rows we have had over this subject.

 

What amazes me is how this market defies gravity,so when it is nearly impossible for most to get a mortgage why is not crashing beyond belief..... cash buyers I hear you call, how many cash buyers are there out there? Its not that many surely,most people cant cope with a £50 monthly increase on their loans, foreign buyers you all cry,well yes London maybe but what about the rest of the country, no Russian`s I know are buying in Hull or Bristol.... Goverment intervention well... not convinced how much control do they really have? if they did would`nt they have stopped previous market crashes and wouldnt other countries Gov`s done the same. Yes the pumping of money (QE) the hack in interest rates but others have done the same and their market has still collapsed.

 

So my question to you after my little therapy rant..... how is it that when you look all over Europe/The west the market is falling like a stone. The U.S, Spain, Portugual, France,and Ireland etc etc are 20 30 40 50 % down how the hell is it still business as usual here. We must have the most expensive houses in the world. Is it the plain fact that us brits are the most stupidest people on the planet and will buy any thing at any price as long as "its mine".....

 

Im getting to the point of packing up and going to grab a bargin else where

 

will this really ever happen when.... where.... and by how much come on tell the truth you wise old men ????????

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I dont know the answer to your question but this is how the little game is being played.

 

First of all everyone pays Council Tax even when your unemployed. Now lets say the average little house pays £2,000pa Council Tax. An awful lot of money for refuge collection which no doubt is sub contracted out, and is now cut to a fortnightly collection. When the good times are rolling no one seems to question this TAX.. The bulk of that money is in fact going to keep a whole brigade of paper shufflers at the local council, employed. This exercise is repeated up and down the whole country were I have read 50% of the working population are employed by the state. You may find that they are better payed and will have a better pension than the private sector. This army of paper shufflers have bought houses, have mortgages are CONSUMERS. In addition you will have seen your petrol bill go up,.........TAX being the main cost, you maybe PAYE, the tax you pay here has gone up, the tax officers (Policeman they use to be called) are more concerned with issuing Notices of Demand for Payment, for the hideous crime of parking beyond your alloted time on a road owned by you by the way. All of this money collection by the modern day Sheriffs of Nottingham, is to pay for this army of none productive paper shufflers. The magic money men keep borrowing more money year on year to pay the salaries of these paper shufflers. When this stops the country folds as there is no plan B. Austerity you cry out, this is what the government is doing, making cut backs. What cut backs there arent any. If there were you would see huge reductions in house prices. These headline grabbing statement are just there to sooth the market. At the moment the market sees easier pray to attack. The largest group that work for the governement work for the banks. They are the new council workers. Without QE and ultra low interest rates the bankrupt banks would fold. That is why London house prices have kept on going up. They are the best payed government employees. So how much longer will it take? Your guess is as good as anyones.

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how rude! to suck foreign investors to buy poor property investments to prop up values? How sad you are to encourage foreign funds to support your failing real estate market to prop up values. What scum you are! What morals do you have?

UK is a shithole full of bastards I hope Europe drags you scumbags into reality!

Er, are you really so angry? Or joking?

 

I do live in HK, and so find it objectionable.

Instead of getting angry, I started a thread on a Hong Kong chatboard, and entitled it:

Avoiding overpriced London property

 

My purpose: Tell the truth, as an antidote against Estate Agent lies... much like on GEI.

 

One of the bulls, who may be an EA for all I know, started his own thread:

Central London Property Outperforms ...

 

Bit-by-bit, I plan to pull his arguments to pieces, and expose the false notions beneath them.

 

Anyone want to help?

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What amazes me is how this market defies gravity,so when it is nearly impossible for most to get a mortgage why is not crashing beyond belief..... cash buyers I hear you call, how many cash buyers are there out there? Its not that many surely,most people cant cope with a £50 monthly increase on their loans, foreign buyers you all cry,well yes London maybe but what about the rest of the country, no Russian`s I know are buying in Hull or Bristol.... Goverment intervention well... not convinced how much control do they really have? if they did would`nt they have stopped previous market crashes and wouldnt other countries Gov`s done the same. Yes the pumping of money (QE) the hack in interest rates but others have done the same and their market has still collapsed.

 

So my question to you after my little therapy rant..... how is it that when you look all over Europe/The west the market is falling like a stone. The U.S, Spain, Portugual, France,and Ireland etc etc are 20 30 40 50 % down how the hell is it still business as usual here. We must have the most expensive houses in the world. Is it the plain fact that us brits are the most stupidest people on the planet and will buy any thing at any price as long as "its mine".....

 

Im getting to the point of packing up and going to grab a bargin else where

 

will this really ever happen when.... where.... and by how much come on tell the truth you wise old men ????????

Where are you located?

 

There have been plenty of falls in the UK, you don't need to cross the channel to find them

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I dont know the answer to your question but this is how the little game is being played.

 

First of all everyone pays Council Tax even when your unemployed. Now lets say the average little house pays £2,000pa Council Tax. An awful lot of money for refuge collection which no doubt is sub contracted out, and is now cut to a fortnightly collection. When the good times are rolling no one seems to question this TAX.. The bulk of that money is in fact going to keep a whole brigade of paper shufflers at the local council, employed. This exercise is repeated up and down the whole country... That is why London house prices have kept on going up. They are the best payed government employees. So how much longer will it take? Your guess is as good as anyones.

Too many government employees in London? YE-AH !!

 

Actually, it is a good point, which is easily forgotten.

With London being the CENTER of UK government there are loads of government-created jobs there - and ontop of that there is a multiplier effect, where businesses that sell to government (contractors of various sorts) and parasitic hangers-on (like lobbyists and media) want to be close to their "customers" and so they are in London too.

 

Home prices are falling all across the UK, apart from London, and taxes are being collected from places where home prices are down. These taxes are feeding the bubble in London.

 

If the UK really wants to do something about high house prices, then they should be finding a way to shift tax-supported government jobs away from the capital. Many other countries have done that. Why does the UK resist this obvious "fix"? Is it because too many powerful people benefit from London's hosueprice inflation?

 

If I lived outside the capital, and was watching my home price collapse, while my taxes go up, to feed the centre - I would not be happy.

 

Isn't that what we saw in the Hunger Games - an imperial city at the centre, where all the wealth and power is concentrated, at the expense of the poorer districts:

 

capitol_1.jpg

 

What happened there, eventually, was a Rev01ution

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Another Frigging Lie !

 

 

New builds worth more than period properties

 

24 August 2012

 

Period properties have slipped down the value scale according to a new survey. The research by CBRE has found that new build flats in London are worth approximately 30% more than older ones.

 

The gap is most pronounced in Kensington & Chelsea where new builds were sold for 55% more than older flats.

 

“New builds are outperforming old properties for several reasons,” Jennet Siebrits, Head of Residential Research, CBRE.

 

“For the buyer, new builds come with the reassurance of the NHBC 10 year guarantee. For the seller, particularly in prime boroughs where land values are high, properties need to look and feel contemporary in order to secure the best prices.”

 

London boroughs showing largest new build premium on flats sold in 2012 Q2

 

/see: http://www.londonlovesbusiness.com/property/residential-property/new-builds-worth-more-than-period-properties/3280.article

 

=== ===

 

I hate this type of distortion : It needs to be called the GARBAGE that it is!

 

This only tells us that buyers are paying TOO MUCH for newbuildings.

 

The only way that New builds "outperform" are in the Excessive prices that Builders achieve when they sell them. This story is spun to have the exact opposite meaning from what the numbers really show: Newbuildings are priced too high !

 

Does any one believe this ridiculous spin? Shame on the spinning liars at CBRE.

 

(comment from there):

 

4. drewster said...

 

New-builds are being bought by overseas investors; native Brits tend to go for the period properties. That alone could account for the difference.

 

However I suspect the real truth is that so few new-builds are erected these days that the numbers are statistically insignificant. I can't imagine that a new-build in Hounslow would be worth more than one in Richmond; therefore it must be statistical noise.

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Well put Chartered Surveyor.

 

The other huge liability is public sector pensions - there is no fund for these - they must come out of the current year's revenues. And it's a bloody huge take. Bear in mind a lot of public sector start retiring early 50s and live for 30 plus years. This is the great elephant never discussed of course. So it gets bigger every year. So yes more ways to tax us. I paid £55 for double yellow parking the other day. Harrow FFS. It would be £110 if not paid within 2 weeks. It's just immoral.

 

I think to answer Mr Fox, the bond markets will eventually twig about how fcked the UK is and will accordingly treat us as the feckless adolescents we are. Reckon within 12 months should kick off.

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Well put Chartered Surveyor.

... So yes more ways to tax us. I paid £55 for double yellow parking the other day. Harrow FFS.

It would be £110 if not paid within 2 weeks. It's just immoral.

I call it the "stupid tax". Don't pay it. Let stupid people pay it.

How do you do that? Get rid of your car.

 

But that means living somewhere that cars are not necessary. This is what is benefitting London,

the Great Walkable City

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