This evening is unusual as it is possible to predict two things that have not yet happened but will to slightly varying degrees almost certainly happen tomorrow.
The first is the end of Tony Blair's 10 years as British Prime Minister. In actual fact he is likely to remain Prime Minister for several weeks but he will finally confirm the details of his departure tomorrow.
While many books have and will be written on the Blair years and I will not attempt to summarise such a significant period in British history here, it is certain that 10 years as Prime Minister is a remarkable achievement and to be able to choose your own departure date from such a job is even more amazing and unusual.
The second event likely to occur is a further modest rise in British interest rates. One of the main reasons for this is to cool the British real estate market. The market like many others in the world has been rising for years and today was confirmed in a survey that London has the most expensive real estate in the world.
The report on the top end of the market, by estate agency Knight Frank and Citi Private Bank, reveals that the average cost of prime central London property is £2,300 per square foot. That compares with £2,190 in Monaco and £1,600 in New York. Completing the top five are Hong Kong (£1,230 ) and Tokyo (£1,100). London's "super-prime" areas are Belgravia (where prices can exceed £3,000 per square foot) and Knightsbridge.
While "super prime" in Belgravia does not have much relevance to the average Brit there is no doubt that house prices in Britain are hugely inflated and increasingly beyond the purchasing ability of anyone who doesn't already own a property.
That this is not sustainable, would seem obvious from a point of view of fundemental economics although international capital inflows into London do continue to support the market. The market no longer (for now at least) cares that huge swathes of the population can't really afford property. There are enough wealthy foreigners supporting the top end and enough easy credit supporting the bottom to keep the show on the road for now. There have been so many warnings of price "corrections" that it almost seems like crying wolf to warn again.
However if the market doesn't "correct" it must surely count as the world's first unburstable bubble.
I recently helped a private client apply for a mortgage to buy 25% of an apartment in London. The client does a normal job that is of value to the community but all they can attempt to buy is 25% of an apartment. So desperate are people to get on the property ladder that such schemes are now very common.
The fear is that if a correction comes that buyers like her will suffer while the owners of "Belgravia Prime" will not suffer even if prices fall by a quarter.
As someone who already owns real estate I don't want a crash any more than the next home owner but the market does somewhat seem to have taken leave of its senses.
Emerging markets continue to soar in most cases although mature markets such as the US accept a property slump as already established http://www.bloomberg.com/apps/news?pid=20601103&sid=aHBopkXhEA24&refer=us and the over inflated Spanish market is also suffering. The FT recently used the somewhat alarming phrase "bursting bubble" to describe the Spanish market http://www.ft.com/cms/s/f2f3b5d8-f29c-11db-a454-000b5df10621,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2Ff2f3b5d8-f29c-11db-a454-000b5df10621.html&_i_referer=http%3A%2F%2Fwww.google.com%2Fsearch%3Fsourceid%3Dnavclient
Many real estate agents still carry on as if the British market really is the world's first unburstable bubble. Yet history and economics suggest that Britain arguably has the most to burst. The interest rate rise expected tomorrow will at least stop the bubble growing so fast.
It is also unlikely that a property crash will happen before Tony Blair leaves Downing Street.
However I think it is clear that in politics and maybe in real estate the times in Britain are achanging....
In more ways than one Britain may be at the end of an era
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