Forget Covid-19 and Brexit. The question to which most people in the UK would want an uncertain answer is what will happen to house prices in 2021.
UK Prime Minister Boris Johnson seems keen to please one set of traditional Tory voters – landlords – even if this could mean putting the health of thousands of office workers at risk.
Instead, he should use his creativity to turn some of the now-obsolete office spaces into ways to fulfil a more important pledge he made not long ago: fight obesity. And not just his own.
UK chancellor Rishi Sunak seems to be trying to build for himself the image of a man who is not afraid to “tell it like it is” when the situation requires it. But his actions show that he is prepared to sacrifice long-term economic development for a short-term boost for his Conservative party.
When he finishes negotiating his “deal” with China, US President Donald Trump will probably try to take credit for the country’s shrinking current account surplus with the rest of the world.
However, the fact that China’s exports are slowing is not a new phenomenon, and it is not necessarily a reason to celebrate.
It is becoming increasingly difficult for central banks to surprise the markets with good news. No matter how dovish they are, investors expect them to be even more dovish still. This financial repression has facilitated the rise of populist politicians, who threaten to bring the end of central banks’ independence.
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.
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.
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.
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.
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.