BANKING CRISIS AND CREDIT CRUNCH
Banking crisis and credit crunch and how property developers, builders and estate agents are going to be hit hardest by this banking crisis and credit crunch as property prices continue to crash
Start of article about the banking crisis.
Row upon row of blocks of flats and houses that have been built in the expectation of selling them off plan to anyone hoping to make a quick buck on the promise that property prices would continue to increase. Now they can't afford to complete the properties because the investors can't find either the finance to complete the sale or anyone stupid enough to take the properties off their hands.
PROPERTY DEVELOPERS
Property developers: But to let landlords are probably the worst hit in this whole sorry mess and in many cases it serves them right. Many of these people have got to be total idiots who thought that investing in property was an easy way to become a millionaire. The banks, all to ready to lend anything up to 125% of the valuation of a property just kept throwing money at any buy to let landlord who wanted to add another property to their portfolio and believed they would be able to find someone desperate enough to pay a rent high enough to cover their mortgage and give them a small profit whilst the value of the property continued to grow.
On paper, many were millionaires that thought they had the Midas touch. Tell me, can you think of anything that continues to keep growing in value without there being a fall in the market? Financial economies are built on profit and loss; someone buying something when they believe it will grow in value and selling just before they believe it will drop in price and hoping some idiot will take it off their hands.
CREDIT CRUNCH
Nothing wrong in that either, but most buy to let landlords aren't experienced business people, most built their property portfolios up without having to put a penny of their own money up as a deposit and as a result many now find themselves caught in the shit without any toilet paper and no one to help wipe their arses. Many millionaires now find themselves in a state of bankruptcy with debts running into impossible numbers.
I said this would happen back in 2005. On a visit to the UK I just happened to look in a few estate agents windows to see flats and apartments for sale with vacant possession. This was as a result of a few buy to let landlords realising that they either could no longer depend on letting these properties at a profit and or taking their profits and getting out of the market because they could see a property crash coming.
This was of course the thin edge of the wedge because as more property developers dumped properties back onto the market, a small glut was beginning to develop, but few saw the writing on the wall.
PROPERTY CRASH
However, there were still plenty of idiots back then, who, having seen the gravy train were still jumping on board and buying property at over inflated prices and the banks were still quite happy to lend them as much as they wanted. These amateurs are the people who in the main have been the hardest hit. They paid over the odds for their properties, thinking that prices would just keep on going up and are now sitting with empty properties and fixed interest mortgages that are coming to an end. I empathise with these poor bastards but can't sympathise because their predicaments are of their own making.
Estate agents: On my trip to the UK in 2005 I looked past the over inflated properties that were sale in the windows and looked at the spotty little oiks that were sitting at their desks, dressed in cheap suits, telephones pressed to their ears and talking animatedly to more unsuspecting property investors about the great deals they had on offer. I wouldn't have taken advice about which restaurant to eat in from them; let alone advice about investing in property; but here you had teenagers making more money than they had ever dreamed of, unqualified, untrained and inexperienced, advising other idiots to jump on the bandwagon.
BANKING CRISIS
A walk down the high street revealed scores of other new estate agents offices that had replaced high street shops and all competing with each other for business. Virtually all of them had a sales and rental department so they were pushing the price of properties up and selling them to unsuspecting investors and then charging to rent them out to the poor bastards who could not afford to get on the property ladder at over inflated rentals. Rather like deliberately infecting people with a virus and then selling them the medicine for a cure.
I have no doubts that many of these new estate agents offices had been opened by leeches who had spent a few months working for an established estate agents and learning the ropes, (how best to stitch someone up) whilst plotting to open up their own offices and set up in competition with their mentors.
Read on about the continuing property crash.
Banking crisis and credit crunch and how property developers, builders and estate agents are going to be hit hardest by this banking crisis and credit crunch as property prices continue to crash
