Tag Archives: house prices

Central banks have bad news for property investors

As the major central banks are slowly retreating from their policy of asset purchases, we will probably witness some of the side effects of this withdrawal.

Warren Buffett famously said that “Only when the tide goes out do you discover who’s been swimming naked.” The tide is going out only slowly, but we are beginning to see, at least in the UK, the damage the ultra loose monetary policy has done.

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As home prices hit record levels, negative equity looms

A statement from Halifax shares the “good” news: home prices paid by first-time buyers are the highest ever.

In the first half of this year, first-time buyers paid on average £207,693 for a home, the highest price on record. This is 4% higher than a year ago, and 50% higher than five years ago.

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Home price inflation keeps going, deepening inequality

The financial repression that central banks started after the global financial crisis of 2007-2009 does not seem to be close to an end. The central banks argue that inflation has not come back to their target of around 2%, but their definition of inflation is flawed.

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Brexit voters blame the wrong foreigners for the London housing crisis

One of the main complaints of some of the “Leave” voters was that Britain is a “small island” and it is “full up.” Immigration “puts pressure” on local services such as hospitals and schools, but, most importantly, on local housing.

Even Prime Minister Theresa May, when she was Home Secretary, said immigration was putting pressure on the housing sector.

Intriguingly, however, it seems the kind of foreigner whom the UK government welcomes is the foreigner who buys homes but never lives in them – the foreign investor.

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The Fed is behind the curve, and happy to stay there

There is a widespread view that the Federal Reserve will have to raise interest rates at a steady pace this year, because it cannot afford to fall behind the curve.

I would argue that it has already fallen behind the curve and has no choice but to remain there. And it is not the only one in this situation. All major central banks are playing the same game; they have no choice.

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Brexit masks London’s status as safe haven for corrupt money

The Brexit vote must be manna from heaven for those seeking to hide their illicit gains in London. Busy with all their posturing and negotiations, politicians will have no time to curtail the criminals’ activities.

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Banning letting agency fees for tenants is just a PR stunt

The announcement by Chancellor Philip Hammond in his Autumn Statement that letting agency fees charged on tenants will be banned has been met with cries of outrage from estate agents.

Their rage is in part justified. Lately, they have been asked to do much more administrative tasks than simply running credit referencing checks. They are also supposed to check immigration papers as well, to ensure that prospective tenants have the right to be in the country in the first place.

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UK buy-to-let tax reform should not be reversed

The new chancellor of the UK, Philip Hammond, will present his first Autumn Statement on November 23. There are hopes in certain quarters that he will reverse a plan by the previous chancellor to stat phasing out tax relief on interest rates for buy-to-let mortgages.

If he does reverse it, he will make a big mistake with dire consequences down the line. The previous chancellor, with various governmental programs such as Help to Buy, had already blown up a real estate bubble — helped of course by loose monetary policy and a flood of cheap money from abroad.

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How a ‘hard Brexit’ could burst the London housing bubble

It looks like I was right when I said the UK was heading towards a hard Brexit. And after all, why not — it’s what’s people have voted for, even though few realise what this means.

The banks are already making plans to shift some jobs out of London into other EU capitals and the French government, usually considered anti-big business, is rolling out the red carpet.

There are some who say “good riddance” to a sector where all sorts of governance scandals have dominated the headlines since the crisis and into which UK taxpayers have had to pour billions to keep it afloat.

While it is true that bank bailouts have cost the taxpayer a lot, a diminished banking sector in the city of London would almost certainly trigger a crash in house prices, which in turn could start a recession.

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Correction of 50% for London house prices possible

As the effects of the vote by the UK people to leave the European Union still unfold, more and more economists say property will take a serious hit. A 50% cut in property prices in London is among the possibilities mentioned by one analyst.

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