Doomsday or Payday? The beginning of the end!!!
Hey guys,
Well it's been an amazing time to be in property, in fact an amazing time to be alive. I have exposure to three different property markets (and recently a fourth) so I have had my work cut out for me keeping up with the UK, Europe, Australia and more recently Thai property markets.
The thing that I am noticing in all of these markets is that governments around the world have joined forces to end the credit crunch. I have an absolute belief that over the next three months you will see the easing of lending between the banks. This is best seen by looking at the LIBOR 3 month rate.
Now I don't often refer you to outside sites but to get a feel for the credit crunch have a look at this website which shows the 3 month LIBOR you will see that it has been climbing up for some time. The LIBOR is what the banks use to lend to each other. LIBOR is the London InterBank Offered Rate. LIBOR is a daily average of what 16 different banks charge other banks to lend money. The higher the rate, the more expensive it could be for all of us to get a mortgage. This is the real rate behind the credit crunch because if the banks are borrowing from each other at 6.27% GBP or around 4.5% USD then they need to lend to you at a much higher rate. It used to be around 0.2% - 0.5% higher (called 'the margin') but now this is likely to be more like a 1% margin.
Anyway back to the real story. Central banks and governments are doing whatever needs to be done to ensure the integrity of the financial markets, so this means money available to lend as it's needed by banks. This will see the end of the credit crunch and a return to normal (allbeit a little restricted).
Now, as an aside you will see the governments around the world coming together to change the way financial markets are regulated. Basically, it will mean more regulation and as one commentator says 'Banking will become boring'.
So it comes down to this - It's the beginning of the end of the credit crunch. Doomsday if you own shares as further regulation will make it harder to make money and PayDay for property investors as the worst of it is coming to an end. Although it will still be a year or so before you will see the market turning upwards, it's a great indication of good things to come.
Property will never be this cheap again! Mark my words!!!
Because of my added confidence in the market and where we are in the property cycle YPC will now be introducing 'Off Plan' developments into our mix of property. This is a great opportunity to take advantage of the current discounted and desperate sales but not have to complete until after 2010.
At this stage we will only be offering property that completes after June 2010. This will give plenty of time to see the market return to normal and I believe even see some growth.
Live with passion,
Brett Alegre-Wood