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HovelinHove

A Case Where Immigration Didn't Lead To Hpi

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I've been thinking about this whole Eastern Europe immigration thing, and of course it has definitely contributed to the extension of our bubble by underpinning BTL investment in the market, and may indeed do so for another year or two, but if you look at what happened in Germany, there is hope for us yet. After German reunification there was a massive influx of East Germans into the West, where house prices had been high for a number of years, but soon after that the German house market headed south, and along with Japan is the only market to have shown decline over the past decade (making it one of the few places to invest in property at the moment). My cousin bought a three bed detached house near Karlsruhe for 150,000 euros recently, it's in a nice area, close to a big city with plenty of prospects (Frankfurt is also less than forty minutes by train).

The reason the German property market went tits up, I believe, is because of the economy. I suspect that the same will happen here, only it will be worse. We are already seeing unemployment rising, once IRs go up, and the consumer fully wakes up and realises they are going to have pay back their MEW, a recession is all but inevitable IMHO. The reason it will be so much worse here than in Germany is because our bubble has been allowed to inflate for much longer and to a much greater extent and once the economy starts shrinking and the immigrants/unskilled locals can't afford to rent as they can't get work, then it will start feeding on itself as over leveraged BTLers will be forced to sell, or just shrug and hand the keys back to the bank.

As an aside, which banks are most exposed to a crash in the BTL market. Banks do go bust, and if things got really bad, it would be those that have lent into this market that may go to the wall along with the deposits of their savers. (I noticed the Allaince Leicester recently offered a one year 10% interest rate account on the internet, are they trying to plump up their reserves for their up and coming takeover or to cover their huge liabilities in the domestic debt market?)

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I really don't know where to start to explain, but here is the short version:

You have as much idea about Germany, the housing market there and the people, as a cow knows how to play the piano.

So, moooooooo to you.

:lol:

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Germany has a far more regulated mortgage bond system. It's far harder to access big piles of cash to splurge on speculation.

Mortgage Banks In Germany

The mortgage banks fund loans by issuing the mortgage bonds. The Government regulates the mortgage banks and the mortgage bond markets. The approved mortgage banks can only issue the mortgage bonds. Mortgage bank activity is restricted to lend residential and commercial property and to state and local Governments. In the end part of the 1990s communal loans accounted for 52 percent of outstanding loans, residential property loans accounted for 34 percent and commercial property lending accounted for 14 percent.

The mortgage banks also issue non-PFANDBRIEF mortgage bonds, which fund the mortgages that do not qualify for the PFANDBRIEF cover. For attracting the customers who perceives that the interest rates will fall further the mortgage banks offer one to two years fixed interest rate bridge loans with options to convert longer term, fixed interest rate loans.

This could well change, of course, and Germany may be able to enjoy the benefits of unrestricted money falling on the housing market.

Edited by CrashedOutAndBurned

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The East Germans also brought a huge swathe of land with them...East Germany.

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The East Germans also brought a huge swathe of land with them...East Germany.

:lol: , a simple, efficient and elegant sentence, you could almost say it was German engineered ! “Vorsprung Durch Technik”.

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Chancellor Khol opted for full moneytary unification with the east when the wall came down.

The most stupid move in history.

Public sector workers where instantly on west german wages, and the private sector crumbled in East Germany.

This event was earthshattering for many reasons, which David McWilliams picked up on at the time of his decision, it would mean massively low interest rates, and a borrowing binge in more flexible economies outside europe etc... Although this single move goes over the heads of many people, it is one of the most important events in European History in this century.

It is the reason today for Germanies high tax base, its low corporate profits and very large scale self-inflicted unemployment.

East Germany as a region is now being stripped bare of people, infrastructure and meaningful (market driven) investment capital due to this, and west Germany suffers a huge burden inflicting this crazyness of artifically raising the prices of everything in east Germany upon itself.

Germanys economic growth could have been into the double digits after unification, the most economically vibrant nation in Europe but for this policy. Its 16 years after unification, East Germany was only a communist state for about 40 years!

Edited by brainclamp

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I really don't know where to start to explain, but here is the short version:

You have as much idea about Germany, the housing market there and the people, as a cow knows how to play the piano.

So, moooooooo to you.

:lol:

I guess by the complete lack of sensitivity in the way you express yourself you must be German.

Edited by HovelinHove

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East Germany as a region is now being stripped bare of people, infrastructure and meaningful (market driven) investment capital due to this, and west Germany suffers a huge burden inflicting this crazyness of artifically raising the prices of everything in east Germany upon itself.

Yep. There's a reason for those 'bargain' six-bedroomed German farmhouses advertised on the net. Large parts of the rural East are, economically speaking, dying.

When wages in the East achieved parity with the West, but without the requisite high productivity, the East's fate was sealed.

Imagine yourself as a West German entrepreneur, considering building a new factory or warehouse to serve the East.

Do you site it in what was East Germany, and pay Western wages and taxes?

Or do you go just a few more miles East, and build it in Poland or the Czech Republic?

A no-brainer.

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I guess by the complete lack of sensitivity in the way you express yourself you must be German.

Whatever.. Bottom line is that you are still wrong!! Sorry (NOT german)

Edited by Wuluf

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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