Where did all this nastiness come from? Moribund credit, excessive personal debt, and a commercial property crash; isn't there any good news out there? Well, some people believe that rents are increasing at double digit rates.
UK economy heads for ‘horror movie’
"Britain is facing an “economic horror movie” because of a “toxic mixture” of a moribund credit market and volatile oil prices." The Ernst & Young forecasting group predicts 1.5 percent growth this year, slowing to 1 percent in 2009; while consumer spending will slow to a standstill. The UK will be lucky to attain these anemic growth rates.
Given a Shovel, Digging Deeper Into Debt
A New York Times video shows how a Pennsylvania woman accumulated almost $300,000 of debt. The collection agencies call at least 20 times a day.
City regulator in mortgage fraud crackdown
The FSA are about to crackdown on mortgage fraud. Why bother? UK mortgage approvals are crashing towards zero. It is another reason why the FSA must be abolished.
Demand for office space crumbles
The housing market isn't the only crash; commercial property prices have fallen much further and faster.
Brown mocked over fiscal rules reform
The Treasury always intended to revise the rules, really, they did.
More insanity from the times property pages
It is becoming a nasty habit; but I can't help myself reading the Times property pages. In this article, the Times tackles the question of rents. Rental inflation has replaced house price appreciation as the saviour for the buy-to-let brigade.
"Given rising demand in a context of less supply, rents in many areas are likely to rise quite significantly in the short run, unless the UK economy plunges into a sharp recession. Although it is difficult to predict short-term changes in housing rents, increases of 10%-15% in both 2008 and 2009 may well occur, outside a relatively limited number of areas with a significant glut of properties."
We are half way through 2008, and the governments rental inflation index is running at about 3.5 percent. In order to get a 10-15 percent rental inflation number by the end this year, rents would have to explode. This is a matter of simple arithmetic.
In principle, 10-15 percent rental inflation is possible in 2009, but only if the Bank of England really began to push up monetary growth. Currently, the money supply is growing at 11.5 percent. Even a pessimist like me thinks that we have probably reached a peak growth rate for the money supply.