The Guardian’s Property Porn – Falling House Prices Are A Goldmine For Buyers Apparently

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The Guardian lets us in on a very odd little piece of economic knowledge – falling house prices are a goldmine for property buyers. This isn’t, we must admit, how we normally think of these things. Buying an asset which is falling in value is not one of the things we expect to make a profit. Sure, prices might rise again, but a falling market in itself isn’t quite the time to be making dosh by buying.

Yet this is what we’re told:

UK housing market is a ‘goldmine’ for wealthy foreign buyers

Rilly?

Jonathan Samuels, the chief executive of property lender Octane Capital, said the 13% drop in the value of the pound compared with the dollar since the June 2016 referendum had turned the UK into “a goldmine for foreign investors seeking a bargain”. “The mainstream property market saw transaction levels tail off considerably following the EU referendum vote,” said Samuels, who submitted the FoI request. “But at the very top end of the market activity levels soared as ultra-wealthy opportunist buyers cashed in on rapidly softening prices. “The weakness of sterling means a fair percentage of these buyers were almost certainly based overseas, as some of Britain’s wealthiest cities became a goldmine for foreign investors seeking a bargain. “While many homeowners sit on their hands during times of political and economic volatility, the ultra-wealthy often use these periods to acquire assets at a significant discount.”

Ah, that makes it plain what is going on. Buying top end London property isn’t a goldmine at all. We’ve falling prices in sterling – yes, top end London prices are falling – and we’ve a decline in sterling. That does indeed mean that some people will be trying to catch a falling knife and call the turn in the market. They aren’t making a profit on this as yet of course, as top end London prices are falling in sterling and Brexit may well cause yet another fall in sterling itself.

What is actually happening here is that The Guardian has swallowed a press release from an estate agent. He might not quite describe himself as such but that’s what he is – someone who profits from more transactions taking place. So, talk up the wondrousness of the market in order to attract more transactions – possibly also being able to finance one or more of those extra transactions.

Hey, it’s great advertising if you can get it, just not a great guide to the underlying economic reality. We can also work out why The Guardian has been losing money all these decades. Normally a newspaper will charge for such a spread extolling the suppliers of financial services – and a hefty whack too, financial advertising is always the highest priced kind.

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