JULY & AUGUST 2012 |
www.opp.org.uk WORDS | John Howell Same Old, Same Old
In line with most people’s expectations, the Euro crisis lives on and is still the biggest story of the month. We’ve all got opinions on the twists and turns of the eurozone – OPP editor John Howell airs his and takes a look at the confusing reports pouring in from the rest of the global economy...
Euro fi asco have been making front page news and generating masses of inside page comment, not just in Europe but around the world. When OPP decided to run the Three Wise (Wo)men column ‘Is the Euro Dead?’ last month, we feared (though did not expect) that the Euro story might be dead before the column was put to press. How wrong we were. This is going to run for many months – until the politicians face reality and make a lot of unpleasant and unpopular decisions. The present approach of saying ‘Oops, it seems to be broken. Nobody told us that this wasn’t going to work. Let’s go and have lunch to discuss the problem’ is not going to get us very far.
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Sitting in our armchairs, it is easy for us all to have our own view on the way out of this mess. For what it’s worth, mine is that: • The West has been living beyond its means for decades but our bank manager has only just realised that we have a huge overdraft and no income to support it.
here is no doubt what has been the main news story this month. The twists and turns of the
• Both governments and individuals have been spending much more than they can afford and will, in future, have to spend a lot less, or they will have to make the totally immoral decision to spend their children’s and their grandchildren’s future incomes to support their lavish lifestyles. • In this situation, talk of solving our problems through growth in the economy is a cruel deception. If governments and individuals all need to spend less, how is the economy going to grow? Some emerging countries will continue to grow but this will be nowhere near enough to support the rest of us – even if we were able to get a share of it. • We need to plan our future on the basis of contraction of our economy – less income all round. Even if we do this, we will still have a lifestyle better than we had 20 or 30 years ago but not as good as we were expecting two or three years ago.
Now this is a magazine for the overseas property industry, so why am I making these points? At fi rst glance, it seems obvious that the overseas property industry depends upon
increasing wealth and lots of disposable income for its success. Rich people buying toys or canny investors putting their surplus wealth into assets. While this is partly true, I think that cutting people’s expectations could open up a whole new area of opportunity for the industry. Cutting back the size of the economy will cut back the amount of
“Talk of solving our problems through growth in the economy is a cruel deception”
work required within it. We will see higher rates of unemployment, people working fewer hours and people retiring earlier. There will be many people, particularly those in later middle age, who will take this as a signal to relocate to somewhere that will offer them a better work-life balance.
The other main property related news this month is really all explained by the economic turmoil around the world. There has been a slew of stories
about prices of property rising, falling or staying fl at. Most are based on low market volumes. In truth, nobody knows where we are going and most buyers are sitting on their hands, deferring major decisions until the fog clears. That could take some time. Towards the end of the month we have seen stories coming in from the more successful economies, particularly in China and South East Asia, suggesting that governments will be taking protective steps to secure the position of their own people and dampen any property bubbles that seem to be occurring. See some of the comments of Andrew Batt in the Last Word column on pages 62 and 63. You might also take look at the proposals coming from Thailand that they will enforce, much more strictly, their existing laws preventing foreigners from owning land in the country and penalise those who try to get around the law by owning through nominees (see the news section of OPP Connect for more details).
Apart from these major international stories, I feel that I must make reference to one very parochial story circulated by UK property portal
Zoopla.co.uk. Normally, we stay clear of UK focussed stories as we are an international magazine with readers all over the world but I think I can get away with this one – after all, it relates to the Olympics and what can be more international than that?
Spanning the globe | the volumnous and often confl icting reports about global markets can get a little confusing at times
Zoopla, who keep a database of the prices of every British home sold in recent years and provide a free valuation service for those thinking of selling their home, have deployed their staff of thousands to look at the price of every property in the UK in streets that contain the words ‘Gold’, ‘Silver’ or ‘Bronze’ in their names. Guess what? They have found that the average price of properties in ‘Gold’ streets is higher than the average price in ‘Silver’ streets which, in turn, is higher than the average price in ‘Bronze’ streets! Now there’s a way of using all the people who will not be needed in our new, slimmed down economy. But just think how disappointed they would have been if they had found that this had not been the case.
NEWS
NEWS ANALYSIS | 13
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