Can House Prices Hold Up Against Reality?

I see that the so-called experts are claiming that property prices in the UK will rise this year, and interest rates will come down, and so will inflation.

I’m not sure who these “experts” are, or who says they are experts, but let’s look at some basic facts which seemed to have escaped those so-called experts.

Over the years I do make predictions about the direction of house prices. I have never yet been wrong.

Some years I make no predictions at all because nothing special is happening, and I think I have made it clear that I have no intention of making a prediction this year for the simple reason that we have a world which has been taken over by brain-dead politicians who are making a complete hash of things which we folks have to put up with. I cant predict the actions of madmen. What I can do is present a few basic facts. In short, if we lived in a world that was not run by screwed-up teenagers for politicians, house prices would be likely to go down this year, inflation would go up, and interest rates would probably have to rise as well, or there would have to be a bout of money printing, which would lead to a falling value of the currency.

Let’s work this through.

We in Europe are still living under the yoke of a rogue organisation called NATO. It does nothing but provoke wars. It is financed and run by the administration in Washington. Its current iteration is the fiasco that is Ukraine, which was started by one of Washington’s many regime changes back in 2014. Alternatively, it was started when Nato promised Russia that in turn for Russia disbanding the USSR, and moving out of Eastern Europe, NATO would “not advance a single step”. That was back in 1991. Of course, Washington almost immediately reneged on that undertaking.

That has ultimately led to a disruption of essential trade with Russia, and that has in turn led to problems with essential supplies that Europe cant or wont provide for itself. Which, in turn, has led to the gradual decline of Western Europe.

The UK could be energy self sufficient. The governments so far have turned their back on that. I make no comment on whether that is good or stupid, but simply point to the result. Those of you living up north either become cold or broke. Industry goes somewhere else, which puts people out of work, and increases the need for importing goods which the country can no longer produce.

Due to non-existent border controls the population is exploding. There aren’t the jobs for the people flooding into the country, so they become a drain on the tax take, and swamp social services. And more people means more food has to be imported, leading to even more trade deficits.

Let me sum up the result of all the above. Less money in people’s pockets. Less money in the government exchequer. More disruption of government services.

A positive for the housing market ought to be that more accommodation is required. Except that it is required for those who cant pay for it. A fat lot of use that is.

Because the above is going to cause an increase in government spending at the same time as the money in people’s pockets is reducing, the tax take is also reducing. That will lead to more money printing, which will feed through to more inflation.

Because people’s costs are increasing while their incomes are not keeping pace with the combined effects of inflation and the continuing decline in the value of the currency, they will not be able to spend more on buying houses. I would have thought that was self-evident. In fact they are likely to be reigning in their spending. That will lead to a sag in house prices, not an increase. As I repeatedly say, house prices depend on the ability of people to pay increased prices. That metric drives most of the rise and fall in house prices.

The rest of the house price driver is the availability of credit. Almost all house purchases rely on borrowing. When the economy is contracting, which it is, banks are less willing to increase lending. They are more likely to reign in their lending, which in turn will reduce the money supply, which in turn will reduce small businesses chances of keeping or increasing their overdraft facilities, which will adversely affect the business cycle and the economic well-being of the country, which will feed back into all the other metrics I have mentioned above. In other words, we have a self perpetuating downward spiral taking place. This is Europe-wide.

Turning to some of the metrics I use, I notice that the prices of real estate are not currently rising, but are static or falling. I also notice that my auction index is showing reduced percentages of property selling at auction, which is an early warning indication that the market is contracting.

Summing up: Governments are spending more than they take in so they need to borrow or print money. The more they borrow with already creaky underlying security, the more lenders will need more security for their loans, which means interest rates will be staying high for the foreseeable future. If they print, then the value of the currency will fall even more which will give the same effect as inflation.

Both the above effects will put pressure on private purses. That means house prices will suffer. In other words the alleged experts dont know what they’re talking about. As usual.

Now let’s have a brief look at the international situation.

Ukraine has been obliterated. I’m wondering who will offer to rebuild the country? Dont look to anywhere in Europe. No country has the resources. The most obvious candidate is China. Does anyone think that is a positive outcome of the war? But at least we may regain some of the advantages of the so-called bread basket that Ukraine has traditionally been.

The Middle East is on fire, leading to the closure of the Suez Canal. Just think of the cost of that to Europe. The increased costs of goods having to travel all around the horn of Africa adds a considerable cost to the goods transported (approximately a 40% increase; that’s substantial). Guess who pays those costs?

And who is paying for all these wars? Wars are ridiculously expensive. Are you getting any benefit from these expenses? Far from it, you are the ultimate payers for these exercises in insanity. Every war these days is a war to end all wars, but every war only sows the seeds for the next one.

All I can say is that I hope for your sake you are invested in the US military industrial complex. If you are not, then you are on the losing side of the war, any war.

I want to put up a few images that I culled from various sources to act as a backdrop to one of my songs that was written several decades ago, using a particular image that runs through the narrative. That image came true a couple of years ago when Americans started signing bombs and having aggressive and rude inscriptions printed on those bombs.

I have to go off-track here and say that increasingly I am sickened by the actions of the world I live in, and I’m wondering what the hell I’m doing surrounded by all these thoroughly objectionable morons.

And that leads me to the next song I’m going to add. I live in a world where The Freaks Are in Control.

The bad news for readers is; you do too.

Not a very good start to the new year. All I can say is that I didn’t throw the first brick, or any subsequent brick.

I go back a long way and I can remember a musical that was playing in London when I was still in junior school. It had a title with a contemporary ring: Stop the World, I Want to Get Off.

This text is also available on one of my Youtube channels, and it is followed by a couple of my songs. Here is the Youtube link: The songs start eleven minutes into the video. The first is called simply Bomb, and although the images are from last year the song was written several decades ago. Seems I was ahead of my time.

The second song was written only a couple of years ago, long after I stopped touring. I hope you find them useful and appropriate.

Here’s that link: