I want to make a quick prediction for 2008. It will be (contrary to what everybody else in this industry says) that the property market is going to fall further and the mortgage mess is far from over. My whole living revolves around property so I don’t say this lightly, but it kills me when estate agents and the like keep saying that it will be o.k. when that is clearly not the case, this is a time where you need to be tuned and ideally experienced in order to gain from it.
Remember: when markets almost as much money can be made, in the same way you can buy then sell a share you can also sell and then buy, things moving downwards doesn’t spell disaster or the end of the world as we know it, it just requires looking at the market and being honest with your view, and it means that you may have to work a little harder for the same gain or move away from certain things altogether.
I spoke to a friend of mine today named Dicey (nickname) and he is a plumber, he told me a few building sites are closed or ‘frozen’. Along with this we have inflation in the commodities arena, petrol, food, all of the fundamentals. Rates are not likely to drop and the ECB at the moment is more concerned with saving the banking sector and greater economy more than it is looking to save you or me personally. The Fed cuts are actually going to stimulate higher Oil prices too.
There are too many properties out there and rents are not strong enough to meet repayments, landlords are going to be vying for tenants, I’m not saying that property is not an excellent long term proposition but right now is the start of an actual ‘tough time’ and frankly I believe that we are currently on the cusp of a recession which will kick in by the end of Q1 2008 and it will not be remedied before 2009 at least. Only hindsigt will tell us if its a recession, but there is no glory in hindsight, only in foresight, but this is one time I sincerely hope I am wrong.
Property prices falling worldwide along with stock markets getting off to a terrible start and the ongoing commodity squeeze all lead me to this conclusion, however on the bright side – listen to this bit! – I don’t think this recession is going to be a 1929 job or anything, it will just be a setback and (hopefully) we’ll dust ourselves off after it, look back, say ‘damn’, laugh and move on.