sonswan

Personally, I don't think the population decline is the driver, and I don't think this is a huge problem (yet) - first decline in a while and might be a blip. Be interesting to see if it is the beginning of a trend. But, as for house prices; it certainly seems the pace of the decline has increased massively the last 12 months. Particularly in the say 300k-600k range. Perhaps a combination of simple issues with affordability, and concern over ongoing and increasing fiscal squeeze? What do you reckon?

Reserves run out on current run rate between 5-10 years time. I cant recall the actual figures and can't check presently, but you can access government accounts on IOM gov website or just Google them. Prices are falling here or in some sections of the market static at best. I would only expect that to worsen in due course. Perhaps not soon, but come 5 years time the price drops may well be more pronounced. Look at price histories on zoopla, or sort by most reduced and look at the falls in price over time, it's quite interesting.

Hi Wsn, Yes, seems ok for now but I really do believe there will be a seismic shift in sentiment over the next 5 years or so. The issue with Flats isn’t entirely new here, they have been building lots of them for a long time, and from what I gather people are struggling to shift them. Re the market defying gravity, as I mentioned low – mid range has fallen but not huge amounts. The government has varying schemes to assist first time (and in some rare cases, second time) buyers, and also interest relief on loan interest (although this is capped). It will be interesting to see if policy on any of the housing support schemes changes as budgetary concerns peak – if they are reduced or capped further the impact on house prices, I feel, could be significant, particularly as they would be made alongside the inevitable tax increases/other spending cuts (which on their own will also negatively impact prices). I don’t know enough about the egaming industry to comment to be honest, but the firms here have a very significant presence, have obviously invested a lot in the Island so it might be more sustainable than one may initially think. Re finance sector, I work in that industry – I don’t think information exchange/tax disclosure has had a real impact yet, if anything there are just more jobs going in compliance. There were similar concerns raised when the EU Savings Tax Directive was implemented etc, I don’t think the impact was quite as bad as people expected when that was implemented; perhaps it will be the same for the new initiatives also. I guess only time will tell. There is a lot of discontent on the IOM particularly with Government – if you are on facebook check out “IOM NEWS AND POLITICS” group, or just look at comments section on relevant stories on iomtoday.co.im. The worrying thing for me is that public sentiment seems to be very much in favour of abandoning low tax environment to maintain current levels of expenditure. Well I think you and I know where that is likely to end up…. The road to hell is paved with good intentions! I think the next 5 or so years are going to be VERY interesting on the IOM, particularly at budget crunch time. The IOM has had a free ride (and in effect a phony boom) for a long time – it can’t go on exponentially. Yep Bill Bonner – what a legend.

I live on the Island and take a similar view to you although I disagree about the economy tanking - I am actually surprised about how things have held up thus far, but I suspect that when the government finance issues come to head things will turn south for real. People have been moaning about "austerity" here but I don't think they have seen the half of it yet. The Island is still drawing down on £x millions of reserves each year to meet revenue expenditure and whilst somewhat superficial cuts have been made, they are not even close to balancing the budget. Add in to the mix the issues with pension liabilities etc and it is not a pretty picture. I would say, within 5 years the people of the Island are going to have to deal with either huge spending cuts or significant tax increases. Like any politicians, whoever is in office will try and defer the day of reckoning for as long as possible instead of tackling the issues at hand - that's why I think the Island will muddle on OK for a few years, until there is no money left. Also on the economy, the finance sector has been holding up ok and egaming continues to flourish, but i worry about the sustainability of the finance sector given FATCA, CRS and all of the anti-tax avoidance hullabaloo, in addition to whether the IOM may be forced to change its taxation strategy owing to budget constraints. I do not own property on the Island owing to my concerns; however I do look at property prices a heck of a lot and whilst house prices have fallen over the last 5 years, they haven't fallen by as much as I would have expected. Prices seem stable (particularly at the mid-range level, say £250k - £500k") for the moment but I think there is more pain to come in that respect, when the spending cuts or tax increases begin to bite per the above. Oh, and there have been loads of flats for sale in Ramsey (in particular, but also elsewhere) for £50k-£100k for ages - the market for Flats on the IOM is not great, they have certainly suffered bigger falls then housing. As for "come overs " leaving; again I don't think this is the case. Until the job situation worsens on the IOM I can't see that happening - in comparison to the UK (and probably most of Europe), we still have it pretty good. Again though, I think this will be short lived. PS: Empire of Debt - one of my favourite books of all time.

Hi Porca, Do you have any further reading on Japanese house prices since early 90s? I recall that they have still not recovered from their peak.

That should read "any decline in the Yen"!

I assume because any decline in the fall in the Yen would offset gains made in yen denominated shares? I suppose the cheapest way of doing so would be to invest in one of the many ccy hedged Japan focused ETFs???

Thanks for the contributions! So in summary what is the conclusion? If you were Japanese and relatively risk averse, there was no way to invest domestically over the 20 year period and generate beyond meagre returns? So for a UK saver, what should the strategy be? Ccy hedged foreign fixed income?

Appreciate the comments.... On higher yielding foreign currency marketed by local banks; as a UK investor I am not sure how easy it is to access these markets without exposing myself to currency risk. Also, I am not sure whether I would want to venture into emerging market fixed income instruments at present - and virtually all developed markets are also virtually at 0% interest rates also. I suppose there are NZ and AUD that perhaps I could tolerate, but then i worry about the FX exposure. I wonder if there are any ETFs or similar that may invest in such currencies that hedge the currency risk.... At the moment my asset allocation is heavily skewed towards cash, the paltry returns on the cash driving me crazy; I do not particularly want to venture into risk assets at present. The reason why I cite Japan, is that i don't think interest rates in the UK, EMU, USA are going up (well enough to satisfy my aims) for a long long time - there must be people in Japan going through a similar quandary to myself!

Hi.... I was wondering if anyone had any thoughts on your average working professional in Japan has invested and fared over the last 20 years. Reason I ask is that if the UK is headed towards a Japanese style stagnant couple of decades with with 0% interest rates, how has the average person invested their money and saved for retirement? If they had been ploughing into domestic risk assets for the last 20 years I don't think they would be sat too pretty at the moment looking at the history of the Nikkei since 1990 (i acknowledged the nikkei has rocketed the past 2-3 years). Does anyone have any further reading on this, or long term investment strategies in a similar environment? I know everyone generally seems to think if you have long investment horizon, stocks are your best bet, but i don't think that is true in the case of Japan. I suppose they could have looked at foreign markets, but if all developed markets are in the same situation, where do you look? Any thoughts or suggested reading much appreciated...

http://www.iomtoday.co.im/news/business/isle-of-man-will-adopt-tax-information-sharing-agreements-with-the-uk-1-5207270 Would anyone care to offer their opinion on this? I am still rather surprised at the relatively moderate (or even negligible) price falls on the IOM to date. I think the forthcoming fiscal squeeze and cuts to the public sector that will need to be taken, coupled with the above news may well impact HPs over the course of the next couple of years. I am still in disbelief at the relative stability in house prices over the past few years on the IOM.

Deadlegs, I agree with you - but is it just me or have we not actually seen a significant correction yet in the housing market here (here- assuming you are a resident!). Yes we have seen some falls but sellers as your comment would also suggest appear to be fairly stubborn at present despite things not moving. I just wonder when we are going to see some real reduction in prices. You would think with bad jobs news recently, the state of government finances etc that the valuations may have come down more substantially by now. Seems to be taking a long time to filter through. Any thoughts?