Remember Alien, when the euphoric, exhausted crew escape in their spaceship, free from danger, and then suddenly the shot pans away and the alien is shown hanging on in mid-space? — well, I am getting a bit Sigourney Weaver about Gordon Brown.
Here we all are euphoric about the recovery (albeit a slow one) from the recession. The property world is going potty, yields are dropping quicker than Didier Drogba in the penalty box, as everyone with cash in dead deposit accounts switches to property investment. What were 8 per cent yields are now 6 per cent. You could sell your bubba’s kitchen for 6 per cent if you guaranteed the income. Soon they will have riot police in the auction rooms.
Following the lessons learnt from several years of reckless investment, the rules have been chucked gleefully out of the window again. Gone are the “highly-leveraged borrowings are king” brigade. Now it’s the “I have to buy property because I have nowhere else to put my money” clan, comprising cash-rich individuals and the lethal pension funds and institutions which are oversubscribing the property market as they chase better returns.
The fundamentals are worryingly similar to the start of the most recent property bubble: spend, spend, spend, assuming values will rise. But there is nothing to suggest these prices are sustainable. Low yields assume that tenants will soon begin to pay more rent and increase returns to the buyer. Nor should one assume that occupier reluctance, so evident over the last two years, will diminish.
Yes there are the much-vaunted “green shoots”: a slight rise in commercial lettings; the FTSE and Wall Street exchanges are up; and above all, that great “painkiller”, house prices, is on the rise.
But all this flies in the face of cultural and economical changes of a type we have never experienced in modern times. We have yet to see unemployment reach its peak and we are continuing to feel the pressure from the government as it tries to pay for the enormous debt that it has accumulated over these past two decades.
Whilst the people dance in the streets of economic recovery, and the bankers’ heads are on spikes above, where on earth is the “white knight” David Cameron? Brown and Mandelson are making noises which are increasingly well-received and I am beginning to get a very strange feeling in my guts that if we are not careful… no, I can’t say it.
Pass the flame-thrower!