Apologies to those of you who opened this named blog yesterday. I did check it as soon as I uploaded it and found a nine minute blog had been got at and now lasted only one minute. God knows what happened. I tried an edit, but in the end had to delete the post and start again. So here it is, hopefully without gremlins
Let’s carry on with our analysis of whether now is a good time to buy real estate in the UK.
The biggest problem is the pathetic rise in wages. This is dwarfed by the inflation figure, which itself is undoubtedly massaged down to a figure which suits the government. The real problem with the finances is the Debt to GDP ratio, which is well over the magic figure of 90, which is when the country starts to go bankrupt. All of these figures hang a dead weight on the cost of houses.
What is worse is that all the financial figures are lining up in the same direction. I would prefer to have more normal figures, but the latest figures I have for the auction index are for august and that is not a useful time to rely on figures as that is the quiet time for house sales. But the figures I do have show a slight leaning towards price resistance. The figures for the Affordability Index are high and close to their maximum. So that also suggests house prices cant rise much from here, and the average mortgage rate is higher than the official inflation rate.
In short, all the major indicators are suggesting that house prices dont have far to rise, and are more likely to fall.
The real kicker on top of that is the state of the nation and the state of Europe. Almost the whole of Western Europe is teetering on collapse. An interesting take on that situation is given by Professor Glenn Diesen. His analysis is sane and to the point, and paints a bleak picture for the continent. Here’s a link to the points he makes:
The final analysis is that Western Europe is committing economic and social suicide. I am getting rid of my expensive homes and downsizing. I advise anyone in a similar situation to do the same.
And then there is the problem of the BRICS and their new approach to money. I have discussed the issues with the SWIFT system. It is expensive, cumbersome, slow, and not fit for purpose. mBridge, SWIFT’s replacement system, based on blockchain technology, is far cheaper, faster, and much more efficient, and is increasingly being taken up across the world.
The gradual roll out of this new system will make the US dollar largely redundant as the currency of choice for cross-border transactions, and that will lead to a loss of purchasing power for the dollar. It will also drag down related fiat currencies, and that is going to be a disaster for resource-poor places like Western Europe, where they have to buy in those resources with failing currencies
There are so many other signs that the West is on the downward path. Let me just mention a few, but for value, the money is heading East, and at an increasing pace.
I think it would be far more helpful and indeed obvious what is wrong in the West if I put two sets of figures side by side. First I list figures for the UK and then the same set of figures for Russia. Just look at the difference and tell me the UK is alright.
UK
Debt to GDP 100%
Trade balance -5.324 Billion
Bank Interest Rate 5%
Inflation 2.2% (seriously massaged)
Economic Growth rate 0.7% (seriously massaged)
Tax Rates: personal 20%
Corporation 25%
Gold Holdings 319 tons
The UK is apparently the sixth largest economy in the world and is declining.
I also cant resist adding that the UK is unable to defend itself. It has an army and navy that cant defend the country from unarmed people in rowing boats. The country has become a laughing stock.
Russia
Debt to GDP 14.6
Trade balance $50 billion+
Bank Interest Rate 18%
Inflation 9.1%
Economic growth 4.6%
Tax Rates: personal 13% (top rate of 22%
Corporation 20%
Gold Holdings 2,400 tons (and that is an under reported figure)
Russia is now the fourth largest economy in the world and growing.
The UK with debt to GDP well over 90%, is running an increasing debt position. Russia has almost no debt, so its high Interest rate is hardly a problem.
Russia’s trade balance is a healthy plus, the UK’s is an unhealthy minus.
Tax rates in Russia are way below those of the UK, and the economic growth rates show a marked difference, and the difference in gold holdings is seriously embarrassing.
Since I have raised the position of gold holdings across countries, do note that China’s gold holdings are probably around 30,000 tons. They do mine the stuff, and exports are forbidden.
US gold is listed at 8,000 tons, but they repeatedly have problems in repatriating gold belonging to other countries, so one wonders whether they have more than the odd thousand tons. When were their holdings last audited? That is going to be another problem for the value of the dollar going forward.
The obvious takeaway from the above figures is that the UK is in big trouble financially. That means the standard of living in the UK will decrease, and that will have a knock-on effect on housing prices.
You guys over there have an incompetent nitwit as prime minister, so things can only get worse.
What can I say? If you can, get out.
Next week I will have a look at some other countries as options.
The Bad News for Real Estate