The Unique Property
Crash Alert 2
A couple of weeks ago I wrote about the problem with house
prices. We are in an inflationary period and this means the
value of money is decreasing, which makes everything cost more.
There are also those supply chain problems. And they are hurting
most economies. Important in this respect are the fuel cockups
and the grain cockups. I will talk about these next week, but at
the moment Canada is deliberately preventing gas from reaching
Germany by refusing to repair an essential item in the supply
chain. The argument here is interesting but I'll cover that next
Grain is being prevented from leaving Ukraine by the Ukraine
government. Understandable in one sense, they might need it if
this year's grain harvest is interrupted, but dont they need the
Yes, it's all a mess. But today's issue is interest rates. the
UK and USA are both raising them which will cause trouble with
mortgage payments, and make the cost of a house more expensive,
likely causing a fall in purchases and a reduction in prices.
Here's a chart showing US house price rises. Parabolic, and at
an all-time high.
With rampant inflation (in reality well into double figures)
people's pockets are empty, and as house prices fall, they are
going to feel emptier.
And, as I said a couple of weeks ago, The S&P CoreLogic
Case-Shiller U.S. National Home Price Index shows that home
prices there are up 34% over the past two years. Homes are
becoming less affordable at an unprecedented pace.
If you are thinking of moving, I suggest selling now, and
renting for a while, and buying later. Now is not the time to
In EU things are slightly different. the European Central Bank
is not raising rates. But we do have the problem mentioned
above. Clearly there is a concerted effort to wreck the EU, and
the threat is not coming from Russia, but apparently from a
bunch of English speaking countries. What is going on? I don't
pretend to know, but I will home in on the subject next week. In
the meantime just beware. All is not well in the real estate
markets, and there are some very perplexing moves being made
which need careful thought.