I have always thought of the housing market as being made up of two types of money, writes LuckyOne on HPC: real money and “fake” money.
The real money is what private renters and FTBs have to use. Fake money is the segment of the market that relies upon using past capital “gains”.
In my view, the divergence between the real and fake money was first seen in the collapse in rental yields.
It now appears to be moving onto the second stage where the FTBs can no longer use their real money to support prices to create even more fake money.
The process is slow but the result is inevitable : prices have to drop to a level that wipes out the fake money.
You’d think.