The average London home is now worth more than it was at the height of the property boom in the fourth quarter of 2007. However, while property prices in the capital have recovered what they lost during the financial crisis, property in the rest of the UK has not.
In response to the 2008 global financial crisis the government in Britain slashed interest rates to 0.5%, a policy known as ZIRP (zero interest rate policy), and embarked on a £375 billion program of QE (quantitative easing). These measures arrested the fall in property prices, but the question is, where would UK property prices be without QE & ZIRP?
Last week’s article ‘The Big Picture: From banking crisis to sovereign debt crisis to currency crisis’, provides a brief outline of each of the macro forces and trends that are currently impacting the global economy and financial markets. Today’s article attempts to show these forces in visual form so that investors can begin to understand the interplay between them.
Property prices in Britain are already unaffordable for large numbers of people, particularly first-time buyers. However, with the launch of the Help to Buy scheme George Osborne is once again doing his best to re-inflate Britain’s house price bubble, and he may well succeed. The question is, how can investors profit from it?
The governments new Help to Buy scheme is not the answer to Britain’s unaffordable housing. The solution, among other things, is to let house prices fall and help people to save by giving them positive real interest rates and more tax efficient savings vehicles.
The Keynesian economic policies being pursued by finance ministers, central bankers and politicians around the world are designed to create inflation and destroy the wealth of investors. This article outlines the dangers and explores ways in which investors can protect themselves.
In nominal terms they may only be down 12.8%, however adjusted for inflation (RPI) UK property prices are down 26.2%, and adjusted for the value of real money, i.e., gold, they are down a staggering 67.5%. And this article shows why UK property prices have much further to fall.
Richard Martin believes that Britain is heading for a financial collapse and that “no country has ever recovered from the financial position Britain finds itself in today.” I spoke to Richard to find out more, and to find out what investors can do to protect themselves.
Since the bursting of the global credit bubble, western governments have been fighting the process of deflation with unprecedented monetary policy. This has led to stalemate between the forces of inflation and deflation, however the ultimate outcome will be inflation and investors need to prepare for it.
Prime London property prices have surged in recent years and are now 16% higher than their previous peak in March 2008. This article examines what’s driving prices up and what could bring them back down.
Investors are concerned about inflation. But how can investors attempt to inflation-proof their portfolios? Buy TIPS? Short Treasury bonds? Stocks? Real Estate? Commodities? Gold? Currencies? Or should investors regard those warnings about inflation as fear mongering?
Over the past 10 years the FTSE 100 index has lost 3.58%, UK property has risen just 9.7%, and the British Pound has lost 27% of its value, in real inflation adjusted terms. Meanwhile, over the same period gold has risen 285% in real terms.
Despite the fact that the price of an average home has fallen by 10.9% since 2007, property prices in Britain remain considerably overvalued. This article shows why that is the case, what is holding property prices up, and why the bubble may already have burst.