England’s housing market is where the U.S. housing market was in the first half of last year. The Financial Times goes on to emphasize that the market in the southern half of England, particularly in and around London is still strong. It’s taking its time, but the real estate bust covered in Conquer the Crash is slowly washing up against the bastions of price growth. In the U.S., all but-the-strongest holdouts, Los Angeles and Manhattan for instance, are in retreat. One of the oncoming deflations most impressive features is its ability to hide in plain site. EWFF pointed to its presence in England back in June:
England’s Citizens Advice Bureau is “being flooded with calls for help from hard up individuals with debts so large it will take them an average of 77 years to pay off.” Notice the naive assumption that these debts will actually be paid back. Conquer the Crash identified this belief as a “primary precondition of deflation.” “Deflation involves a substantial amount of involuntary debt liquidation because almost no one expects deflation before it starts.”
Two more signs of deflation’s sneak attack are the belief that “growth appears to have reached a plateau” and the “army of buy-to-let investors.” Deflation is rolling in only very slowly because the “plateau” concept is so deeply rooted, but as England’s army of debtors and lenders catch wind of the potential, the flood gates to falling prices will open wide. For a picture of the real estate tide rolling over see the entries of August 10, 2005, August 11, 2005, February 7, 2006, March 15, 2006, July 6, 2006, August 19, 2006, September 11, 2006, and December 7, 2006.
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