"The cost of borrowing is down, but house price declines will continue in many areas.However the trend towards lower interest rates should mean that recovery arrives rather earlier than expected, probably 2011"
This summarises the consensus of views after the rate cuts- but still nothing is quite as it seems on the streets in Britain.
The housing market has been seen to reveal some surprising activities- a result of a phenomenon I've just learned to be "the Icesave(reference to the Icelandic bank) effect" - where the belief is that investments in property is better than in a savings account. Despite the government's pledge to the depositors, savers are already unnerved by Llyods TSB's takeover of HBOS (UK's formerly reputed top investment, savings provider and mortgage group) and other such worrying events - the bailouts etc.
The biggest factor that I think sparked the extent of which the credit crunch has affected so many, is the PERCEIVED threat to deposits from bank instability, much more than house prices. Buyers are still putting their money on their terrace houses silently waiting for recovery, totally avoiding anything to do with banks as such: hence, exploiting their purchasing power, knowing that aspiring purchasers are struggling to obtain mortgages at this PERCEIVED ideal time. Deadlines are set, and the agreed price cannot be renegotiated. And this leads to another slug in the market.
Will the 2012 Olympics rebound prices as expected? Or is it again- mere speculation?
Latest: US follows Gordon Brown's move to save the banking system- governments to put money into struggling banks AND offer similar guarantees worth hundred of billions to persuade banks to lend to each other again.But will this be meaningful at all?
On another note, I've just read that Abdullah Badawi will be stepping down in March, with Najib next in line - will Malaysia recover from the political mess that has built up over the years?
