Comment from this week's newsletter
Speaking of the next 23 months, we do it we think things will get worse. There are many reasons for this
and here is one. Many small businesses have financed their activities using their house as security. Now
the value of their house has gone down in business cash flows have tightened up are finding they cannot get
extra financing from their bank. That may mean the only way to save their business is to sell a house.
For others who may not have used their house as security their businesses will nonetheless probably be
struggling and these operators may look to flick off their holiday homes. In fact one can't help thinking that
something very nasty could be just around the corner for prime holiday home locations. Over-indebted
people will be looking to off-load these excess properties for a great number of reasons.
With the price of petrol being so high the cost of getting there for a weekend away has skyrocketed.
Second, if they are near water then the cost of running there fizz boat up and down the lake or along the
coastline has also shot up. Even if they just have a jet ski the cost has also gone up.
But in addition we have seen a lot of coastal developments in recent years and many of these will only just
be coming on-stream. With demand pulling back and developers no longer being able to easily access
finance they will be looking to sell these assets - probably at a deep discount.
And on top of that there is the general state of the economy which will be dissuading people from borrowing
money to buy a property they will probably only see a small number of times each year.
But this opens up opportunities for the baby-boomer generation who may have been looking enviously at
their highly indebted neighbours in recent years wondering why they also should not be gearing themselves
up to buy extra properties. Now they have the answer. Their neighbours are in many cases well munted.
Now they can pick their retirement home up in a nice location for a song - at some stage in the coming 12
months.
and here is one. Many small businesses have financed their activities using their house as security. Now
the value of their house has gone down in business cash flows have tightened up are finding they cannot get
extra financing from their bank. That may mean the only way to save their business is to sell a house.
For others who may not have used their house as security their businesses will nonetheless probably be
struggling and these operators may look to flick off their holiday homes. In fact one can't help thinking that
something very nasty could be just around the corner for prime holiday home locations. Over-indebted
people will be looking to off-load these excess properties for a great number of reasons.
With the price of petrol being so high the cost of getting there for a weekend away has skyrocketed.
Second, if they are near water then the cost of running there fizz boat up and down the lake or along the
coastline has also shot up. Even if they just have a jet ski the cost has also gone up.
But in addition we have seen a lot of coastal developments in recent years and many of these will only just
be coming on-stream. With demand pulling back and developers no longer being able to easily access
finance they will be looking to sell these assets - probably at a deep discount.
And on top of that there is the general state of the economy which will be dissuading people from borrowing
money to buy a property they will probably only see a small number of times each year.
But this opens up opportunities for the baby-boomer generation who may have been looking enviously at
their highly indebted neighbours in recent years wondering why they also should not be gearing themselves
up to buy extra properties. Now they have the answer. Their neighbours are in many cases well munted.
Now they can pick their retirement home up in a nice location for a song - at some stage in the coming 12
months.
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