Wednesday 9 July 2008

Apocalypse Soon?

Is the world coming to an end? Economy in recession, house prices through the floor, and rain in the week after Wimbledon. Something has clearly gone wrong, and this may lead you to ask whether a deity of one sort of another has it in for Streatham. Of course most people won't care very much about that one way or another, and wouldn't turn a hair even if a lake of fiery brimstone were to appear adjacent to the Bus Garage.

However, on balance, the lack of the brimstone lake, or even a small crack in Streatham High Road leading straight to Hell, tends to militate against divine intervention in our lives.

The bottom line is though that we are in for a rough time. The recent increases in food, energy and commodity prices are not driven by temporary fluctuations in markets; they reflect a real fall in the surplus of food production globally, partly it seems caused by an increase in the area of farmland given over to biofuels; and also the inability of oil, gas and commodifties to keep up with expanding demand, especially from the Far East.

The net result is that for the first time in 50 years, we will be seeing real declines in standards of living, although it may be that some of these are balanced by a decline in housing costs.

Certainly the amount of disposable income of most people will fall, and with them the capacity for spending on new homes or secondary investments. In the light of this, the chance of a rapid recovery for the housing market seems remote.

So selling, even at a discount, may well be a sensible option, particularly if in the next three years, you will need to refinance.

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