In May 2014, 259 Islington homes changed hands; in May 2016, 139 houses were sold in the Borough: this May, it was 89.
It's not just volume that's down: prices have also stagnated, flat for all of 2017, with many economists predicting a sharp fall.
Many of the house-sales in recent years were purely speculative. London is ground zero for the world's money-launderers, who buy homes as a way to secure the cash they've smuggled out of their countries, treating the world's most illiquid asset as something close to cash in its liquidity — there were so many other money-launderers queued up to buy anything in London that prices kept rising and houses and flats could be flipped for cash on a few days' notice.
But that liquidity depends on the firm belief that there will be more buyers in the future, and that they will drive prices up over inflation. And since housing is an essential, increases in housing prices are major drivers of inflation, so keeping house prices ahead of inflation is a Red Queen's Race: every time house prices rise, so does inflation.
Once buyers drift away from the market, a whole load of speculators find themselves holding overpriced assets that no one wants at anything like the price they paid for them ("if you can't spot the sucker at the poker table, you're the sucker"). Like kids playing musical chairs who intuit that the music is about to stop, everyone scrambles to dump their assets, driving down prices, increasing the scramble.
London property prices are so overheated they can hardly be described. Think of every insane story you've heard about New Yorkers or Hong Kong people with good incomes living in shit-holes far from the (increasingly empty) center of town and multiply it by ten.
Like any Ponzi scheme, the London property market needs geometrically-expanding infusions of capital to keep from collapsing. Some of that came from the government (stripping tenants' rights to increase the value of property markets; creating loopholes for capital gains from housing sales; providing cash subsidies to first-time home-buyers; prioritizing luxury investments over housing for working people in urban planning) and a lot more came from reckless, crooked global 1%ers who can't find anyone to buy their empty safe-deposit boxes in the sky.
Hardly Any Homes Are Selling in London
[Bloomberg]
(via Naked Capitalism)
