Re: Re: Costas – When will this market bottom?



I agree most people don’t follow market economics and it has very little influence on their ambitions.
However the property market is directly affected by economic trends and you cannot buck it.
Your example of the couple from Scotland is probably fairly typical of people about to either lose their money or become trapped once they buy. If they don’t have the cash price they will struggle to get finance and whatever they do buy will decline in value because the market is continuing to fall.
Yes EU countries are coming out of recession technically but with very small growth levels hardly enough to cover inflation. That fact will not improve the property market which is effected by the other forces I have described.
In economics, stagflation is the situation when both the inflation rate and the unemployment rate are persistently high.
At the moment inflation is a global problem due to higher commodity prices. Unless central banks act soon and increase interest rates it will choke off any economic recovery. Unemployment is rising because government austerity measures are starting to bite and small business cannot get sufficient credit from banks to expand.
I agree recessions have been common and boom and bust is an integral factor in capitalist economies. This time around however it’s much more severe. The more severe recessions are the longer it takes to recover.
Property markets are historically the last part of the economy to enjoy recovery. So for this one I predict long recovery periods with property at the end of the queue.