It seems clear that we’re on the verge of an enormous financial
crisis, one that’ll make the last one look like a wasp-ridden al fresco meal (a
picnic, keep up Nick Clegg, Christ…).
No one seems to mind though, so that’s good. In fact, Osborne seems quite
pleased at the way everything is going. The unprecedented drop today of
inflation to zero, he not only takes credit for, but the fact that we are on
the verge of deflation and he is planning massive fiscal cuts after May, he
seems to positively welcome. Which seems a bit…odd.
Anyway, I’m a Chartered Surveyor. So back to houses. So,
houses eh? Cor!
I recently heard a Tory pitch to ‘frustrated first time
buyers’ on the radio, saying you should now vote Tory, as they have introduced
the FTB ISA. This would provide an extra three thousand pounds, potentially,
towards a deposit, which, as it happens, starts shortly before the Help to Buy
2 scheme expires. So this new scheme will prop up house prices by allowing
those who are going to buy anyway to have a slightly bigger deposit, and then
when minimum deposits go back up to 10% for mortgages, on an average house in
the south east, that will leave a mere extra thirty thousand pounds to save, in
cash, for everyone else.
He then mentioned the 20% discount on new homes for FTBs,
also promised by the Tories, as a reason for FTBs to vote Tory. This is a great
scheme – buy a badly constructed and un-insulated shoe box, with no section 106
contributions – so no roads, drains etc – and the developer can say they’re worth
20% more than they would otherwise, and then ‘knock’ 20% off – job done! Hurrah!
What slipped through the cracks when this was reported was
that these shanty-towns will also replace social housing construction
nationally, so even less affordable housing will be built. If any.
I also love the other Tory promise to increase housing by
proposing to flog off the remaining social housing at a discount, and then
replace them, only not as a many, as there won’t be the money to do so, as they
were sold at a discount. Let’s make sure we have more cake by selling all our
cake, cheaply, and then making slightly less cake! Hurrah! Because that will
mean we have less ca….oh, hang on…
He also mentioned the savings on stamp duty, which has been
reformed so that there is now no slab structure. I was fairly drunk when I did my
Masters in economics, but even I can remember basic stuff: this streamlining of
the tax involved will increase the velocity of transactions in the market,
which, with dwindling supply, will increase prices. Hurrah!
I wrote a blog about Vladimir Surkov, but I haven’t posted
it yet – but essentially, he is a chief advisor to Putin, and is a master at
saying and making people believe one thing, whilst doing the complete opposite,
thus creating constant confusion amongst any opposition. He calls it the ‘non-linear’
world. He has been behind Putin’s actions in Crimea: effectively invading, and
then saying ‘what us? Nope, we’re not doing anything…’.
A cynic would say this is what the Tories are doing; so,
here goes: THIS IS WHAT THE TORIES ARE DOING. They are pretending to help first
time buyers, but are making is harder with every sinew of their being(s).
I think the point I’m trying to make here is this: if you
are trying to buy a house for the first time, but can’t afford it, and you
think voting Tory will make it easier ultimately to buy your first house THEN
YOU ARE WRONG. Their policy, and everything I’ve mentioned above, is designed
to keep house prices high. Whether you can buy a house from now on depends almost
entirely on whether your parents have a house.
This worries me. Even though my parents, being the lucky, baby-boomers
they are, own a house worth ten times what they paid for it. And even though I ‘helped’
them access their internet banking the other day, and they have now very
generously given me a large deposit, and it’s not my fault they can’t remember actually
doing that, but you know, they’re getting old and what-not. But even they are beginning
to see that this is not healthy. What kind of madly inefficient society has
this created?
You hear now all the time ‘all we need to do is build more
houses’. And yet, of the million houses built since 2000, 86% were bought by
BTL landlords. Build another million, and we’ll still potentially have a ‘crisis’.
Maybe it won’t matter though. Sovereign wealth fund
transfers, the so called ‘wall of money’ flowing into the west, which has kept
interest rates low for years, are going into reverse now. The Fed looks like it
is on the verge of tightening policy. We are facing deflation. Private debt is
at an all-time high. And public debt is twice what it was in 2010, more or
less. The government is printing billions every month, and using this money to buy
its own debt to fund its own fiscal activities (that fact alone is fairly mad).
So, when interest rates are forced up because of this, the current
three million amateur buy to let landlords will put their properties on the
market overnight, kicking out their 9 million private tenants with a few weeks’
notice. Only no one will be able to afford to buy them, as years of no wage
growth will finally catch up with us: we will realise house prices are a
leveraged bet on low rates, and they will tumble. Banks have, on average,
nearly thirty times more assets than equity – so a 3.5% drop on their balance
sheets would wipe them out. So banks will go bust. And everyone will have to
sit down and work out what the hell they’re going to do.
I won’t though, as I have my parent’s internet banking
details. I’ll be in the Caribbean…
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