OK, I know this will sound more than a little strange (hypocritical?) coming from someone who has managed to do reasonably well from property speculation over the past few years, but I am now beginning to see storm clouds on the horizon for many...including myself, which is why I am pulling back now - yes, most (probably not all) of those little prizes I have collected are now going to be up for sale. In terms of risk, I feel that we may be close to a tipping point as we go into 2008 in the property market in Eastern and Western Europe and especially in the US. True, the market way well hold out until mid to late 2009, but I would rather grab now what I know to be very solid capital gains at what I am fairly certain is close to a peak rather than risk a huge loss for what will likely be a small chance of a small increase.
Why do I believe this? Simply, the more people I speak to, the more I begin to think that the world has gone nuts, that greed has taken over sanity and competence (don't ask) and that the lunatics are not just running the asylum, but the bodies that are supposed to accredit and vet the asylums.
In America, I am simply gob-smacked at some of the people who have obtained mortgages: 100% finance (and in some cases more!) of $700,000 properties by people who have incomes that are barely 1/20th of the loan obtained, with dubious prospects of keeping that job, let alone promotion. And that is assuming any due diligence has been done at all - seems that the paperwork for a lot of these mortgages has been done in a very sloppy fashion. And this is not from some tiny backwater lender, but one of the biggest financial enterprises in the US - whilst I better not name it directly, it seems to be saying Yes far too often...a word whose power can cut both ways. ;-)
I found what I was told impossible to believe at first...then hard to believe...then I didn't want to believe it.
Now, I don't have a choice - I have to believe it. It's real. It's insanity. And it will have to end. And the way it will end could be scary.
So, I now chicken out. Other people are more than happy to buy. Good luck to them.
