Buyers’ confidence has been key to the rise in house prices over the past decade. But that is now disappearing as central banks are forced to refocus on inflation risks, and interest & mortgage rates start to return to more normal levels.
Chemicals and the Economy
“We now understand better how little we understand about inflation”, Jay Powell, US Federal Reserve Chairman
We are facing a perfect storm of global food, energy and financial crises set off by the war in Ukraine. Analysts need to stop focusing on monetary policy and the inversion of the yield curve. They need to look out of the window and start dealing with the geopolitical reality of Putinflation.
Debt, deflation, demographics and Brexit set to challenge London house prices
London property websites haven’t used the word “reduced” for many years. But it’s starting to appear again on homes for sale and rent, even in core city postcodes. And in another sign of the downturn, homes can now be on offer for months without moving. The problem is that prices were already ready to tumble […]
The BoE’s pre-emptive strike is not without risk
The Financial Times has kindly printed my letter below, arguing that it seems the default answer to almost any economic question has now become “more stimulus” from the central bank. After 15 years of subprime lending and then quantitative easing, last week’s warning from the Bank of England suggests there are fewer and fewer economic […]
London house prices risk perfect storm as interest rates rise
2000 should have been the natural end of the BabyBoomer-led economic SuperCycle. The oldest Boomer (born in 1946) was about to leave the Wealth Creator 25 – 54 age group that drives consumer spending and hence economic growth. And since 1970, Boomer women’s fertility rates had been below replacement level (2.1 babies/woman). So relatively fewer young people were […]
Interest rates and London house prices begin return to reality
Global interest rates have fallen dramatically over the past 25 years, as the chart shows for government 10-year bonds: UK rates peaked at 9% in 1995 and are now down at 1%: US rates peaked at 8% and are now at 2% German rates peaked at 8% and are now down to 0%: […]
London house prices face perfect storm as Brexit risks rise
The UK goes to the polls on 8 June in a surprise General Election. And premier Theresa May has clearly decided to base her campaign on a “Who governs Britain?” platform, as she highlighted when launching her campaign last week: “Britain’s negotiating position in Europe has been misrepresented in the continental press, the European Commission’s stance […]
London house prices start their collapse
London’s house market has been slowing for some time, as I noted last year. The issue is affordability. Artificially low interest rates make the monthly payment seem cheap. But the key question is whether your salary will allow you to repay the capital borrowed over time. Sadly, this has become increasingly impossible for many actual […]
German markets stumble as “Sell in May” theme continues
My 4 May post was titled “‘Sell in May and go away?’ as US, German bond yields jump“. Since then, US interest rates have continued to soar and the US stock market is starting to wobble, as I discussed last week. Now emerging markets are in the line of fire. $9.3bn was withdrawn last week – […]
China becomes net exporter of PVC as property bubble bursts
China’s property bubble is collapsing, with average house prices now down 10% from their peak. As agents Knight Frank note, “The developers have two to five years of stock to clear. So until that has been cleared, prices aren’t going up any time soon” We are also seeing more bankruptcies amongst property developers. These began a […]
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