The Unique Property
This blog is about the consequences of the sudden lurch into the
digital world that we have seen during the lockdowns, and
consequential absurdities forced upon us by crackpot
So far in this short series about the hectic march of
digitalisation I have concentrated on what has been going
forward rather than what has been left behind.
Since i run the Unique Property Site I see at first hand what is
happening in the world of real estate. The way the world goes is
reflected in what happens in the world of real estate.
In the seventies there was a massive spike in interest rates,
and the value of money fell through the floor. Naturally this
had a serious affect on prices in real estate. As interest rates
rose, so the ability of people to meet their mortgage payments
came to the fore, and people decided that renting was the better
option. They either sold up and moved into the rental market, or
were forced out by the real owner of the house, the mortgage
company, and had to seek shelter elsewhere.
Naturally this led to a slump in house prices. Mortgage rates
went through the roof, and people did their maths, or the
mortgage companies did the maths for them, and reality came back
with a vengeance. Suddenly people became aware of one simple and
crucial fact of life: it isn't the price of a house that counts,
it's the cost of the mortgage.
I always counter the stupid things people say about house prices
by reminding them of that fact. House prices have nothing to do
with the number of people wanting to buy a house. I want a top
of the range Ferrari, but I won't be buying one any time soon
because I don't have the money that I would be prepared to pay
for such a luxury. Ergo (that's latin), I shan't be buying one
any time soon.
People only buy houses if they can afford not the house but the
mortgage. If lockdown has put them out of business they won't be
keeping up the mortgage payments if (or shall we say when?) the
mortgage rates rise.
That's one side of the situation. Whether you like it or not,
one of two things is going to happen very soon; either interest
rates have to rise to counter inflation, or there has to be more
massive money printing which will trash the value of currencies.
Either way the average household suffers a massive loss in
wealth. And we have just seen that a loss in wealth, or an
increase in mortgage interest rates, leads to a failure in the
housing market. It's what is often called a knight's move, from
the game of chess. Place your pieces on the chess board in such
a way that one move by your knight will land it on a square from
which it can threaten two pieces of your opponent's team. It
doesn't matter which piece your opponent moves, one of his
pieces is going for the chop.
In short, whichever financial option comes into play over the
next two or three months, the housing market is going to start
I suspect the answer will be money printing because governments
can't handle current debt levels, and with an increase in
interest rates they will go under.
Let me remind you of one grade A debt coming due within weeks:
the US government needs to refinance (if my memory serves me)
three trillion dollars in securities. They cant do that. The US
government is already broke. If interest rates rise, then the
level at which they borrow will be even more painful than the
current negligible rate. Ergo (that means 'therefore') rates are
not going to rise for at least for the next two months. But,
So we are about to see the end of house price rises, and
gradually that will translate into falls. I suspect there will
be a rather nasty crash, but, as I keep saying, I do not have a
crystal ball, but anyone buying right now needs their head
Now let's look at the other side of the equation.
The last time there was a crash certain properties became
unsustainable. At the moment high rise apartments are not very
attractive. As readers of this website know you can buy one bed
apartments for as little as £2,000. And the prices of larger
apartments are on the skids also. After all, who wants to live
in a two-bed or three-bed apartment on the fourteenth floor when
you have two or more kids in the middle of a lockdown. That's a
recipe for marital breakdown, revolution, suicide, whatever.
It's certainly not something you want to take on a mortgage for.
But look at this week's members' bulletin. The properties for
sale are starting to include some very interesting items. A
couple of month's ago we had a glorious large country house that
was trading as a hotel on the market for the price of an average
house in a nice quarter of London. Hotels are going bust,
especially mid range hotels; the ones that cant easily adapt
back to house plus rentals, and cant survive because they are
part of a chain. If the lockdowns come back, those hotels which
haven't already gone under will go bust. Expect to see a lot
more on this site.
We are also featuring a bust cinema and a bust night club.
Expect more of them to come on the market.
Religion is in steep decline, hence the deluge of churches and
chapels we already see on the site.
With more and more work from home situations we will be seeing
more and more office buildings coming onto the market.
In short, ladies and gentlemen, the shape of the real estate
market is beginning to undergo a serious change. Be prepared for
even more, and faster, change than previously experienced. We
will, of course, be ahead of the game here on the Unique
I will be continuing my look at the digital future but next
month I will also be doing my usual look ahead to another year.
I suspect 2022 is going to look very messy from the window that
will be January 1st.