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Everyone's a landlord nowadays, why not give it a go?

Interest rates are low, and housing is a safe bet. Grab yourself a real asset, safe as houses innit?

Maybe that will continue to be true.

However, things aren't what they once were...

This is from ANZ's latest New Zealand Property Focus. ๐Ÿ‘‡๐Ÿ‘‡๐Ÿ‘‡

We wrote about the NZ housing issues back in February ๐Ÿ‘‡

โ€˜Youโ€™ll Own Nothing And Be Happyโ€™ - RBNZ
New Zealand house prices are up 20% in 2020, and the Reserve Bank of New Zealand (RBNZ) are increasing the LVR to slow the climb. Thereโ€™s more to this story though...

And the government is trying to rein in property speculation with a new law ๐Ÿ‘‡

The draft new law limits property investors from deducting mortgage interest from their taxable incomes, first announced in March, will take effect from Oct 1 and is part of series of real estate measures introduced in the South Pacific nation of 5 million.
โ€œTax is neither the cause nor the solution to the housing problem, but it does have an influence, and this is part of the Government's overall response,โ€ Finance Minister Grant Robertson said in a statement.
Billions of dollars in government stimulus, historically low interest rates and New Zealand's relative success with COVID-19 have inflated house prices, as returning Kiwis and investors parked their funds in real estate, pushing house prices up far ahead of wage growth.

Over in Australia, house price gains have been noted and they're looking to take action...

Frydenberg signals home loan crackdown
Regulators are working on a crack down with more than one in five home buyers now borrowing more than six times their incomes, a risk that could be felt if interest rates jump or people lose their jobs.

Similar affordability concerns have been noted in other countries too.

Every case is different, but if a landlord can no longer deduct mortgage interest, and their rental yield is reduced (house price growth drastically outpacing wage growth makes it harder to increase rent proportionate to the investment), what was once a no-brainer now becomes something to truly crunch the numbers on...

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And if you decide that landlording is for you, don't get too good at it. Public opinion is not on your side... ๐Ÿ‘‡

Berliners vote to expropriate large landlords in non-binding referendum
A majority of voters in Berlin wants city hall to expropriate major landlords such as Vonovia and Deutsche Wohnen to help reduce rents in the German capital, provisional referendum results showed on Monday.

A majority of voters in Berlin wants city hall to expropriate major landlords such as Vonovia and Deutsche Wohnen to help reduce rents in the German capital, provisional referendum results showed on Monday.
Around 56% cast a ballot in favour of the non-binding initiative, compared to 39% against, Berlin government said following Sunday's vote, which was held alongside elections for the city government and the national parliament.
The results come as Vonovia, the largest German residential rental company, said it had reached the 50% threshold needed to buy smaller rival Deutsche Wohnen, creating a housing behemoth with some 550,000 apartments worth more than 80 billion euros ($93.7 billion)
Public anger has been growing in Berlin over tenant rights and affordable housing, which were a major issue in the election campaign in the traditionally left-leaning German capital.
The group that initiated the referendum declared victory and called on the city senate to draft a law to expropriate and socialize large housing groups. Campaigners hope the city will take control of some 240,000 apartments.

Speaking of referendums...

Want to miss the wood for the trees? Start by blaming everything on Brexit. It's impossible to judge what's actually going on if everything is seen through a Brexit lens first.

If people always start at Brexit, that's often where they stop too...

"Well of course the country's going to shit, Brexit was always going to be a disaster and look at it now! I've been proved right again"

(Case closed. Onto the next...)

Seriously. Anyone holding their views that tightly cannot be curious enough to look for any alternative explanations.

Which means they miss the details...

It's been terrible with the lorry driver shortage and petrol 'crisis'.

"Oh, it's all because of Brexit"

No it's not. Here's what's actually going on?

It was first reported last Thursday that BP has told the government that it plans to restrict deliveries of petrol and diesel to its network of service stations to ensure continuity of supply.

BPโ€™s Head of UK Retail, Hanna Hofer, said it was important that government understood the โ€œurgency of the situationโ€ which she described as โ€œbad, very badโ€.
According to Hofer, BP has โ€œtwo thirds of normal forecourt stock levels required for smooth operationsโ€ and that level is โ€œdeclining rapidlyโ€.

Sounds serious... Just how bad is very bad?

BP will run 80% of services levels to 90% of BPโ€™s forecourt network and that most locations, as a result, will not be restocked for one-and-a-half days a week.
Forecourts on motorways will be prioritised and will be restocked as normal.

Doesn't sound like a crisis, should be manageable as long as no-one panics...


Anyway, BP had a solution.

"Let us bring in lorry drivers from abroad to ease the crisis"

They say it would only be temporary, but it's obvious it won't be. A 'quick fix' never solves the underlying problem, and the fix usually becomes the solution.

In any case, that probably isn't enough of a solution.

It's the same on the continent too...

The BBC spoke to Jens Romer Sode, COO of Lithuanian-based Girteka and one of the largest operators of goods vehicles in Europe, with about 8,000 lorries.

His comments:

  • Girteka plans to hire about 7,000 new drivers this year, saying that more of them are needed per vehicle, so that workers can spend more time at home.
  • Time was needed to ramp up the number of drivers and train them properly: "It's not really something that is done in a heartbeat."
  • Some eastern European countries used to have "an endless amount of labour looking for this type of job, but that has definitely changed".
  • Improving conditions for entrants to the job was now important.
  • "For the industry, it's very very key that either we make this attractive as a workplace and as a career again or we will face more and more of these bottlenecks."
  • The shortage of lorry drivers was not just a UK problem, but was affecting other European countries too.
  • "We employ drivers in Lithuania, but just as many in Poland, Norway, Denmark and Germany, and we see the challenges everywhere."

The Grocer has a great article on the situation, and there's a lot more going on than Brexit...

The rate of retirement has unsurprisingly risen over the past decade, from around 7,500 per year in 2010 to 10,000 per year in 2020, according to analysis of ONS data by Driver Require. This works out at about 4% of the workforce retiring each year.
In pre-pandemic times at least, this was more than offset by new entrants to the industry. Between 2015 and 2019, there were three times more test passes each year than retirements. In theory, driver numbers should have been growing.
However, this wasnโ€™t the case โ€“ suggesting many of those who passed their test choose not to drive commercial HGV vehicles at all.
There are now more than 230,000 HGV licence holders under the age of 45 alone in the UK deciding not to work in the commercial haulage sector. For whatever reason, these people have spent around ยฃ3,000 acquiring an HGV license only to later opt out of driving commercial vehicles for a living.
To put that in perspective, there are more 30 to 34-year-olds that fall into this category than there were total EU drivers in the UK before the pandemic.
It is unclear exactly why the numbers are so high, although working conditions, salary rates, and unsociable hours are all thought to be factors in the exodus of qualified people from the industry.

Whilst Brexit will sometimes be a factor, focusing on Government-bashing and "it's all because of Brexit", is a waste of mental energy.

What could people miss?

What if we're staring down the barrel of persistent global supply chain disruption? ๐Ÿ‘‡

๐Ÿงต Thread

Perhaps the bargaining power of labour is shifting as we mentioned here ๐Ÿ‘‡๐Ÿ‘‡๐Ÿ‘‡


Especially in the sectors that notoriously relied on cheaper labour to supress wages and allowed working conditions to deteriorate...

Dario's VILE scenario (Volatile Inflation, Limited Expansion) could lead to a very unwelcome conclusion...

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