- Experience 1: The apartment
- Experience 2: The Weoley Castle Property
- Experience 3: The Willenhall Property
- Experience 4: The Crewe Property
- Analysis of the Property Market 2010
- Analysis Update
- The one that got away
- Repossession Report 2010: 36,400
- The Dangers of Investing Abroad
This is another feather in the WPM's cap; the first one was forecasting a repossession rate of 50,000 in 2009 as opposed to the CML's 75,000. At the time, they reduced it 65,000 then 48,000 and it eventually came in at 46,000 but then it was revised to just over 47,000. Notice, that the WPM always stick to their forecast come what may - and we're always vindicated.
The WPM's forecast for 2011 is 32,000. Impossible I hear you say. Well, the RICS believe that the down trend will continue to 33,000 and the CML believe it to be 40,000. With Q4 GDP at -0.5%, I rekon the CML will win this round especially with the spending cuts yet to bite and the base rates yet to rise.
I'm betting that the BoE won't raise rates while the economy is in dire straites - the spending cuts will do enough damage. Besides, it won't affect the real inflation; all it will do is choke demand reducing productivity and sales thus reducing GDP. Politics of a mad house if they go against advice.
The WPM will help stabilise the economy thus helping improve the repossession rate. Remember the latter is an indirect effect of the progress the former is making.
Since I wrote this post 6 months ago, it looks like that the BOE is heading advice and not raising base rates despite protestations by some members of the MPC. Expectations by many economists that the BOE would raise base rates is shameless because they were scaremongering and trying to force a rate rise to the detriment of the Economy.
ReplyDeleteLately, the economy has been taking a hit even in the absence of rate rises. Possibly the effects of the spending cuts are beginning to be felt. Economists have touted inflation as the trigger for rate rises. But, the current bout of inflation is caused by global factors which are outside the control of any one Government let alone the BOE.
Personally, I believe that rates won't rise until improvements in the economy become visible. And it won't be in the near future. Tackling inflation requires a global effort and close cooperation. The earthquake and tsunami in Japan reduced their growth to recession levels and reduced the growth of their dependent countries. Ironically, this should have a beneficial effect on inflation ie it'll reduce it.
The problem is that reduced global growth causes reduced profitability everywhere else and hence puts pressure on employment levels. So, if you're relieved from inflationary pressures, your job may become at risk.
It has been concluded that employment levels do not reflect output levels. This is because employees chose to have their pay reduced substantially rather than lose their jobs. Lenders are not so quick at repossessing properties for one reason or another - described as forbearance. Economists are now worried that too much forbearance will store a lot of trouble for the future.
I will go along with that unless the employers and lenders know what they're doing and can deal with any negative issues that crop up in the near future. My opinion is that the austerity measures were brought too soon or rather at too acute a level. But we have to work with it.
My advice is that if the worst comes to the worst, the austerity measures should be the first to go. If industry struggles and the government helps them out, it will negate the purpose of the austerity measures. They will have upheld Gordon Brown's Golden Rule - borrow to invest.