Paul Hodges: UK house prices could fall 50% in global ‘Great Unwinding’

Merryn Somerset Webb interviews Paul Hodges about the global economy’s ‘Great Unwinding’, and how Britain’s house prices could halve. 

• If you missed any of Merryn’s past interviews, see them all here.

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Merryn: I’m here today with Paul Hodges, Chairman of IeC and an expert in the economic impact of demographics. I’ve interviewed Paul before; last time I did, he was absolutely right on everything. We’ll talk more about that in a minute, but I want to start by talking a little bit about the oil price.

Paul, when we last spoke you predicted a fall in oil price –you said that you thought the oil price would fall from $80 to $50 by the end of last year, and at the end of last year you were saying you thought it would be down at $50 in the first half of this year, so you’ve already been proven very, very right. Can we just talk briefly about what the basis was for that forecast?

Paul Hodges: Yes, it’s what we call the ‘great unwinding’ of policymaker stimulus that if you look at where we’ve been since our last interview here two years ago, central banks have pumped more and more money into the economy. As a result, we’ve had a sugar high, really, where financial markets just go up in a straight line. In China, people got the idea that somehow suddenly China had become middle class, and so there was this enormous demand and there was free money from the Fed and the Bank of England, so everything looked wonderful.

When we spotted – and this, I suppose, is because of history that I used to work with President Xi’s father in days gone by, and I knew immediately that he became president that he wasn’t going to continue the policies of the previous leadership – he was very definitely going to take things back to what he is now calling a ‘new normal’. Whether he’s taken it from the title of our book I don’t know, but he’s all the time talking about new normal.

This is critical because lending in China from 2009 to last year went up from $1trn to $10trn, so it was worth more than all the rest of the stimulus. If you get a new leadership coming in who say, “That’s it, we’re going back to normal, we’re not bothered about property wealth effects anymore and lending bubbles, we’re going back to income,” suddenly the bubble is burst.

Merryn: Okay, so the new normal is what?

Paul Hodges: The new normal is based on the fact – which, personally, I think everybody watching this interview will welcome – that life expectancy has grown by 20 to 25 years over the last century and as a result we now have nearly one in two of adult population over the age of 55.

The corollary of that, as you and I have discussed many times, is that people over the age of 55 already have everything they need and they’re moving, therefore, into a world where their needs are lowering and also their incomes are going down, so you cannot possibly get growth. It’s a very simple argument; it seems to be very obvious to me. Therefore, that is the new normal.

I don’t think it’s a bad thing if you go through life. My life, personally: born after the war, vast numbers of baby boomers born in the UK; 900,000 babies are born a year, on average, for 25 years. You came into London; most of it was bombed out – literally bomb sites and everything else – and so you had a tremendous supply problem just to catch up, because factories had been bombed and everything after the war, but all this demand from us babies coming through.

Then, from 1983 or so onwards, what you found was that gradually we began to get jobs, and we began to earn some money and, yes, our demand was very steady because there were so many of us, but also we were creating supply, and so you went into this second normal of disinflation. We peaked at 20% or so and now we came down.

Now we’re in the third normal, which is the new normal, where we now have this older generation who are going to live for 20 or 30 years, and we are going to go into deflation because we’ve got all the supply left over from when we were consuming like mad, but we don’t have the demand anymore.

Merryn: To bring that back to the oil price, the oil price up at $100 was a function not of real demand but of stimulated demand?

Paul Hodges: It was a complete and utter charade from beginning to end. There has never been, since 2009, a single moment anywhere in the world where there was a supply shortage, a customer didn’t get the oil, the petrol, or anything else that they wanted, but it was all built on wishful thinking from the central banks. They were saying, “We can create demand by printing money.”

The problem is, if you look at the markets, the futures market, where the financial players took the money from the central banks and they went into the… They wanted a store of value, because every pension fund in the world knew that Ben Bernanke and Janet Yellen wanted to devalue the dollar. As a result of wanting to devalue the dollar, pension funds looked for a store of value. That, of course, was oil, because everybody uses it, very large market, and it’s priced in dollars.

What you saw, instead of financial players and physical players – the oil companies, people like us who buy to use for transport and for heating and so on – instead of a balance of one-to-one, you’ve suddenly got six times as many financial players going into the market. What happens? Of course, the price rises and goes from $30 at the end of 2008 up to $120, because you can’t print oil in the way that you print money.

Merryn: Effectively, the press discovery mechanism for physical players just disappeared, during that period disappeared?

Paul Hodges: Absolutely, absolutely destroyed, entirely by the action of the central banks.

Merryn: What then is the trigger for the change, the end of QE in America?

“China realised that if they carried on with this stimulus programme, the economy could well implode”

Paul Hodges: No, I think that people have got this wrong. We’ve been very, very Fed-centric. I think there are two reasons why it has happened. One is that people have lost the power which they used to have of looking at things with their own eyes. If you read the financial papers today, we read any kind of discussion, it’s all about what Janet Yellen had for breakfast or what is it that she’s going to do with interest rates? “Will she raise them in June? Will she raise them in March? Will it be a quarter of a per cent?” or whatever.

It’s not about the real world and people got into this habit, but if you look at China, China is different. China has realised that if they carried on with this stimulus programme, the economy could well implode – implode – so they stopped. Not only did they stop, but they began to go backwards. We wrote a research paper a year ago saying, “From $1trn to $10trn and back again.”

Once you start deflating a bubble, it doesn’t go slowly, it bursts. This is what you saw happening in July and August. That was why we made the call in the middle of August, we said, “The oil price is now going to collapse, and the obvious logical corollary of that is the dollar is going to go very high indeed,” and we’ve seen that – the oil price down 50%, the dollar up over 10%.

The dollar going up 10% may not immediately, if you’re thinking in pounds and so on, become very important, but it’s absolutely critical because you’ve got $6trn or $7trn of debt in the emerging economies all tied to the dollar, all thinking, “We borrowed at 1%. Aren’t we clever?”

It was 1% then, but now it’s 1% plus 12% increased value of the dollar, so you’re going to see bankruptcies all over the emerging economies – and, of course, you’re going to see bankruptcies all over the States because people have spent $1trn. It’s terrible, this word ‘trillion’. Before 2009 I didn’t know what the word ‘trillion’ was.

Merryn: I suspect most people still don’t – or can’t picture it, anyway, a trillion.

Paul Hodges: No, it’s mind-boggling what has happened here. I used to think billions were rather a lot.

Merryn: So, bankruptcies in the US connected to the huge infrastructure spending in the energy sector?

Paul Hodges: Yes. The US economy is now riding for a fall. We don’t know how big it is, but if you look at jobs growth since 2009, it’s all – and I mean ALL, with capital letters – being tied into the oil and gas exploration bubble, so all the rest has not moved at all.

If you look at the housing recovery, such as it’s been – it’s been 600,000 to one million, which sounds good, but when you’re coming down from two million it’s not so good – that 400,000, most of that new house building has been in Texas in the oil belt, because I was in Houston summer last year; 10,000 people a month were coming into Houston, so you’re building a lot of houses.

Merryn: So, the USA economic recovery has been very heavily leveraged to the shale boom, which in turn was caused by very low interest rates in QE.

Paul Hodges: Yes.

Merryn: So, as that reverses, we can only expect the US economic recovery to just disappear?

Paul Hodges: My view of it all is the Fed is actually irrelevant here, that the real action is over in China, that the Fed could do maybe a $10trn final blast, but would the new Congress actually allow that to happen? It’s an interesting question. I don’t know the answer, I just raise the question, but if you look at what’s happening in China, you see that the property market taxes… Property taxes paid last year in China fell 30%. That’s a pretty big downturn in one year.

If you look at what’s happening in the car market, all the growth in the world car market from 2009 to today has been in China. The rest of the world – ourselves, Europe, the States, India, Japan, the other big countries and so on – overall we’ve been flat, so the growth has only been in China. Now you’re seeing dealers arguing like mad, in public, with companies like BMW saying “Look, we’ve got 55 days of inventory. We can’t sell this stuff; you have to give us some money” – and some very large sums of money.

Merryn: BMW has had their money in China, hasn’t it, to keep the dealers on the go?

Paul Hodges: Absolutely, yes.

Merryn: Yes.

Paul Hodges: Yes, so you can see that the bubble that was China is being reversed and there are some very sensible policies about future growth going on. President Xi and Premier Li are moving forward on what they call the ‘New Silk Road’ – very, very ambitious growth, but targeted much more to income levels and the real world.

Merryn: Let me ask you a question about the Silk Road. When you say they’re trying to create a “New Silk Road,” what exactly do you mean?

“We will see this ‘great unwinding’ continue, and the Fed will end up being very, very surprised one morning to find that the US recovery has disappeared.”

Paul Hodges: You’re looking at trying to stimulate… What China is worried about is employment, and it’s also worried about the half of the country where incomes in the rural areas are still only about $1,000 a year – not a day, $1,000 a year. Most people in China, the average income is still only £4,000 or £5,000 a year; it’s very, very low.

What Xi is looking at is to say, “Let’s do a railway link; let’s improve the railway link,” so he’s looking at very ambitious railway links all the way from China to Europe, and companies like Hewlett-Packard are already using this. Then he’s got a marine route, which is again, obviously, moving out around Asia in particular and over to Africa, and then he’s got his trains and his high-speed trains route.

As opposed to the previous leadership, who were focused entirely on property bubbles and, “Let’s get property bubbles as high as possible because that will mean people spend,” he’s saying, “Let’s actually build for the future. Let’s recreate the position of China as the Middle Kingdom.” It’s very ambitious; we don’t know, of course, whether it will work, but it’s a far better use of what cash you have than building more and more empty skyscrapers that nobody lives in and nobody can afford.

China is the place to watch and as long as China doesn’t change policy, which I think is very, very unlikely – as I say, if you know somebody’s father, you often know their children, so I think President Xi will stay the course here – what I think will happen, therefore, is that we will see what we call this ‘great unwinding’ continue and the Fed will end up being very, very surprised one morning to find that actually its US recovery has disappeared. That’s not surprising, because the Fed was very surprised when the financial crisis happened in 2008.

Merryn: So it would be a surprise if they were surprised again.

Paul Hodges: Yes.

Merryn: That rather suggests that you don’t think the fall in the oil price and other commodity prices – iron ore, copper, etc – is over yet.

Paul Hodges: No. No, I think that what we’re seeing is the other phrase that we have, and I have to say I am now more concerned than I was two years ago. Then one could come out with ideas and the downside from the wider world seemed less. Today, because of what the central banks have done, we’ve created massive debt – really massive debt now.

What worries me, keeps me awake at night, is this sense of we’ve got an unwinding starting in China, we see already that Russia and other Opec countries – not the ones in the Gulf but the others – are in major economic crisis. We see that affecting in turn our own companies: the terrible story about farmers and the collapse in the milk market, for example. This is a real disaster there.

Now we’re looking at a return of the eurozone debt crisis and Greece – and, of course, we’ve got mounting political risk here in the UK. Nobody believes that one party can get a majority in the May elections at the moment. Nobody actually believes that two parties… If you put Labour and the Scottish Nationalists together, and the Tories and Ukip, they probably can’t get a majority either.

Merryn: You know, Paul, I tend to think of myself as being quite depressing, but you’re really stealing my thunder here (Laughter). Can you think of anything, any good news in your scenario?

Let’s go back to demographics, for example: if 55 was the age of retirement or the age that you would say people move in for replacement, stop spending, etc., very few people really retire and stop life, effectively, at 55 anymore, do they? Seventy-five is really the new 55; people work that long. Even if they’re not going to keep a spending and consuming lifestyle going, they tend to pass money and the ability to consume down to their children, so is there any way out of this demographic disaster in that sense, or could it be delayed maybe by couple of decades?

Paul Hodges: I am actually quite happy. It may not appear so, but I’m actually quite happy, because I believe that we are now going to have to confront the issues that we should have confronted ten and 15 years ago.

I absolutely agree with you and it is a wonderful bonus that we are all living 20 or 25 years longer, so why have we got a lower pension age than 100 years ago when Lloyd George brought it in? Why are some countries, like France and Germany, actually reducing the pension age?

Merryn: This seems crazy, right?

Paul Hodges: Absolutely.

Merryn: Why is this happening?

Paul Hodges: It’s because – and this really comes to the question of the general election: why are people so apathetic about political parties? – because they know they are not talking about the key issue. The key issue is you have an older population, you have to keep people in work; if you put people in work, you can also train up young people. Older people have actually trained up their kids; they can train up other people’s kids.

You can create growth, you can create incomes, you can change the structure of the economy, but you cannot run an economy where nearly one in two adults is over the age of 55 as if it was full of children. It’s ridiculous and yet the politicians, because they are living on sound-bites, will not have this honest conversation with people that says, “Look, it may be depressing that you’re not going to be able to live on your pension for 30 years. I’m very sorry about that, but it’s one of those things. You are going to live for 30 years, with a bit of luck. Therefore, on the bright side, wouldn’t you like to keep your mind active? Wouldn’t you like to carry on doing this wonderful work that you’re doing here?” You have that conversation.

Of course, some people are going to get upset; that’s understandable because they’ve been treated like children – for 10 years they’ve been told, “No, go away; it’s a small number.” We used to have, in the UK, we used to have 900,000 babies a year born, for 25 years. Then, for the next 25 years, we only had 750,000. It’s most unfair to ask those 750,000 to subsidise the 900,000; it is most unfair and we shouldn’t be doing it.

Merryn: Why do you think the young don’t engage more on this? There’s always a much lower turnout – voter turnout – among the young than among the old. Why are they so apathetic? Why don’t your children do something about this?

Paul Hodges: I think my children are like the adults. I talk to a lot of groups, [I got] very lucky to be invited to talk to groups all over the country, and what you find is people feel they have no voice – that they say these things, and they go and they may talk to their MPs and so on, but nobody listens. It’s all American slick jingles and sound-bites.

Merryn: But we’re going to be forced to confront it by, effectively, a Minsky moment of some kind.

Paul Hodges: I think we are now seeing the Minsky moment. As I say, I think this is not at all a bad thing, the collapse of the oil price. You’ve got a lot of people around who a year ago were telling us that a high oil price showed that we had a strong economy.

Merryn: It showed nothing of the sort.

Paul Hodges: Those same people are now telling us that a low price… I said, “For goodness sake, could we get somebody who actually talks sense here and is consistent?”

Merryn: On the matter of talking sense, when I last spoke to you in 2013 you told me that gilts would be the absolutely best thing for the retail investor to buy, and you were right.

Paul Hodges: I did.

Merryn: Absolutely right. Should they be holding those gilts?

Paul Hodges: I have to say I am not an investment advisor, as you know, so I can only tell you what we are doing as a family, and I’ve sold my gilts.

Merryn: You’ve sold your gilts. Why have you done that?

Paul Hodges: Because I am worried about the concept of are we actually going to be able to pay our bills? Return of capital. We have such vast debt in this country and we are clearly… Inflation now down at 0.5% and we will have deflation within another couple of months because of the oil prices – absolutely inevitable. We’re going to go into deflation, and deflation itself is fine, but not if people have created vast debt that now can’t be repaid.

Merryn: You’re now genuinely concerned about a default of some kind on UK government debt?

Paul Hodges: Yes, I am. Yes, I am.

Merryn: That’s quite a leap.

Paul Hodges: It is. I’m not saying it’s my base case, but I don’t like the idea, which may only be a 10% chance at this moment, but yes, for 30 years I can tell you that it was in 1991 I thought, “Gilts are the right thing to do,” and we’ve held them in our portfolio all the way through. Of course, there have been ups and downs, but it’s been a very good investment. We’ve stopped; we’ve sold the lot.

Merryn: Interesting. The other thing you were absolutely right on was you said not to buy Tesco, not to hold shares in Tesco. You said “We don’t need superstores like that anymore because the over 55 don’t need stuff, so they’re not going to shop in superstores.” You were right there too (Laughter). Is there any case for buying Tesco at these levels, or have you got another brilliant tip for us?

Paul Hodges: I’m not against Tesco at all; I want Tesco to succeed. What I was against at that time was Phil Clarke’s policy of trying to, just like the central banks, trying to pretend that we still have the population and the demand levels of five and ten years ago when Tesco was very successful, and so he was building more and more supermarkets, more and more hypermarkets. I’m a great fan, I gave two positive ideas last time; I said, “Unilever,” which is up 10%, and “P&G,” which is up 30%.

Merryn: Thank you very much for those.

Paul Hodges: Probably people who listened – as I say, I was not giving advice – people who listened might have thought about those. I’m very positive about Unilever.

Merryn: But you see a business going in the right direction?

“In the early ‘90s house prices went down 50%. I think that we’re at the start of that kind of decline now”

Paul Hodges: I think the fact that he’s closed 40-odd stores, and he’s stopped building another 40 or so odd, and he’s now putting more people into the store, because what is it? The difference in a phrase is that when you’re younger, and you’re rushing off to work and the kids are screaming and everything else, you are probably cash rich, with a bit of luck, and time poor. When you’re older, you’re time rich and cash poor.

That’s just the way it is and so you want to be able to go down to your local store, and you want to have a chat about something, and you’re only going to buy what you need for that day. It’s much more of a social thing, so you need more people, you don’t need automatic tills and everything else; that’s not what I want.

Merryn: Small stores with checkout people.

Paul Hodges: That’s right; we want to go back to the local grocery (Laughter). That’s expensive, but if you want to be successful… This is the part of the great unwinding – that companies are going to have to go back, not to stripping out costs but to focusing on, “What does my customer want?”

Merryn: One last question on demographics and the great unwinding: when will this demographic change mean UK house prices fall?

Paul Hodges: I think they’re already falling, sad to say. I just wish they’d never got to these levels, but I think you’re going to see… You were saying recently that at the top end prices would be under 15 or 20%.

Merryn: Yes, completely.

Paul Hodges: We’ve seen price falls in the housing market in the past in the early ‘90s and they went down 50%, and I think that we’re at the start of that kind of decline now – as I think, indeed, fairly soon we will be at the start of that in the stock market as well. As I say, I’m not depressed about this, because it’s just something that we have to go through to get to reality.

Merryn: You’re not depressed, but in the short term, from an investor’s point of view, no commodities, no equities.

Paul Hodges: No.

Merryn: House prices will fall.

Paul Hodges: Yes.

Merryn: Do we hold cash?

Paul Hodges: Yes.

Merryn: We don’t hold cash when…

Paul Hodges: Absolutely, because cash is actually going to be a very good investment because under deflation the value of cash goes up every day. The other thing about this, what we’re looking at today, people who remember 1973 and the oil price shock of the Arab oil boycott, that was the day almost, those few weeks, where people suddenly got the idea: “What I ought to do is I ought to borrow as much as possible and I ought to buy as quickly as possible, because the borrowing will go down because of inflation and it will be more expensive if I buy it in a week’s time.” You brought forward consumption.

We are now – and it’s already happening, so we don’t have to talk about this as theory, this is already happening now – over the next few weeks we’re going through the deflation shock. The deflation shock means that by the summer people will say, “I don’t really need… It’s a lovely sofa, actually; I don’t think I need a new sofa just yet. Anyway, if I do, I could get it in another three or six months; there’s no great urgency about this. It will be cheaper then.”

Merryn: And the same with houses, so the fact that mortgage rates are now at their lowest ever, pretty much, and you can get a ten-year fixed-rate mortgage for the cheapest price since records began doesn’t mean that we should rush out and buy houses?

Paul Hodges: The cost of a house is relative to earnings. At the end of the day, the interest… You were mentioning Minsky and the thing that Minsky highlighted was that you have to be able to repay the capital. It’s all very well repaying the interest, keeping going all that, interest-only mortgages and so on, but can you actually afford, if you’re in London, a  £300,000 or £400,000 flat, a one-bedroom flat – lots of them around at that kind of price – when the average earnings in London are about £30,000?

Merryn: I don’t think you’ve included the oligarchs in that average.

Paul Hodges: No, I’m leaving the oligarchs out. Sad to say, the poor oligarchs are suffering already and we’ll all have a collection for them, I’m sure, sometime in the year. No, I’m more worried about ordinary people, like my sons, who have been priced out of this market.

Yes, it’s all very well saying, “They can afford the interest.” They could, but they can’t afford the capital repayment, so for their good, for the good of this younger generation, I’m afraid us older generation have to say, “We did pretty well out of this. We’ve got to hand something back.”

Merryn: Final question: is it possible for a deflationary environment to persist when central banks can print as much money as they like and shovel it into the economy in a variety of different ways?

“Cash is going to be a very good investment – because under deflation the value of cash goes up every day.”

Paul Hodges: People have to want to spend, and if you don’t need to buy anything and if you are fairly cautious about knowing exactly how long you might live, then it’s quite difficult, I think, to encourage people to spend.

The central banks, the economists, work on this theory, which was fine at the time – Modigliani’s theory – which said that we all know how long we’re going to live and therefore we consciously make a decision to hold back on consumption today so that we have something left for the future.

That was fine if we were all dying at 50 because you weren’t holding back very much, you were just getting more money as you got… But if you’re living to 80 or 90, say, how long are we – you and I – going to live? We don’t know, so probably, if we’re sensible, we’re going to err on the side of caution.

Sixty per cent of our economy is personal consumption, so if people are not wanting to spend in that way… What the central banks could do, and I do worry about this: they could create hyperinflation.

Merryn: Yes.

Paul Hodges: They could because they…

Merryn: This is our worry – that they could. They have the ability to do so; anyone can create inflation if they really want to.

Paul Hodges: Yes, but what I hope is that common sense prevails and that we abandon these out-dated economic theories. Milton Friedman came along and he said that inflation was “Always and everywhere” – and monetary – but he’s wrong, of course; he’s completely wrong.

It’s understandable for Friedman to be wrong, because he was working during the baby boom in the States. The States had a 50% increase in the number of babies being born over an 18-year period. Of course there was massive demand, of course there was no supply, because the US hadn’t been bombed on the mainland; all its factories were making tanks and everything. It takes a long time to start making fridges and consumer products and so on, so of course there was inflation, but Friedman confused cause and effect.

We’ve had six years, let’s face it, six years of central banks believing that Friedman was right and saying, “If we put out enough money, then we will end up with inflation. Sorry about that.” Could we have some common sense on this which says, “If you’ve got an older population, you’re not going to want to spend,” and could we please, instead of being negative about all these older people, could we not celebrate this and say, “Isn’t it wonderful that our society has achieved this?”

Does it really matter if we have GDP? Let’s face it, before 1929, which isn’t very long ago, nobody measured GDP, so for thousands of years people were pretty happy and getting by without thinking about…

Merryn: Without knowing what growth was, yes.

Paul Hodges: Yes, and so they were having kids, and going out, and doing all these things, and so I don’t see why we should worry about GDP at all.

Merryn: I think that’s going to be a hard sell to politicians.

Paul Hodges: I think that the politician who has this debate with people in the main election will get a surprisingly large number of votes, and I also absolutely know that politicians who don’t have this will be punished by the electorate.

We see this: that the middle ground of politics is disappearing because people no longer trust these platitudes. They’re saying – they say it to me when I talk – “They’re treating us like children. Why should I vote for somebody who treats me like a child?” Let’s have a serious adult conversation. If there is bad news, can we have the bad news, because once we have the bad news we can decide what to do about it? You can pretend it’s alright – useless.

Merryn: I think we’ll have to leave it there.

Paul Hodges: Lovely to talk to you.

Merryn: Paul, thank you very, very much.

  • Rear Admiral Sir Vincent Smyth

    For an expert in demographics Mr Hodges comes out with some very inaccurate statistics. As of 2014 the UK has 18 million adults over 55 and 32 million aged 18 to 55. Nowhere near one in two (closer to one in three)even if you move adulthood to age 21.
    He also as usual misplaces the UK baby boom we had a small blip of extra births from 1946 to 49 then no boom as such until the years 1958 to 1971. Those people reach his age 55 between 2013 and 2026. He also says boomers went in to jobs from 1983, if so he accepts the boom started in 1965 not 1945.
    To make my point in none of the years 1948 to 59 did the UK reach the 900,000 births he claims
    I also take issue with his claim that the over 55’s have everything they need. They need decent smaller homes, reliable cars , holidays and cruises, deposits for their childrens homes, tuition fees for their grandkids etc. Over 55’s do not create a drag on the economy ,they simply move demand elsewhere.

    • Aztec

      Your needs are all voluntary, they are not essential and I think that is the point Hodges is trying to make. You do not need a new sofa and you certainly do not need a cruise and in the current environment of low returns we will not be able to afford them.

      • gareth2w

        I would totally agree here, it is common for an over-55 year old to stick with the same car and not endlessly change their houses. Moving down does happen, but that does not require more “stuff”, and even more usual are the same parents staying in the family home for their retirement making very little changes.
        And how common is it for an over-55 to seriously start to save diverting more of their income into a pension – very common I would say, especially if the house is paid for.

        • Rear Admiral Sir Vincent Smyth

          Average life expectancy in the UK is 82 and rising. Will the over 55’s keep their car for 30 years or more?

          • gareth2w

            They won’t likely keep their cars for 30 years as most older people get rid of them around 75-80, although keeping a car for 20 years is reasonable now.

          • mcray

            No but they will (generally) buy smaller more economical cars less often than they used to.

            • DownwithHS2

              Smaller and more economical, but it makes more sense to change them regularly. Leave it too long, they lose too much of their value to ever buy a new one as a replacement.

      • Rear Admiral Sir Vincent Smyth

        He is right to assume some shifts in the economy due to am aging population, but as an expert he ought to check his facts, especially when sat with an editor whose job is to ensure her magazine is accurate.

      • Obie!

        Completely agree with you Warwick. I’ve watched my parents approach their 60’s and, they’ve considerably reduced their spending habits. They are completely content with their car they’ve had for several years, which gets them from A to B. They don’t feel the need to spend any further money on their house and, sadly I’ve progressively watched them cut back on the number of luxury vacations they take. They no longer crave designer clothing and, would rather shop for a bargain. They are definitely watching the pennies and, are by no means poor.

        My mother has naturally cut back on her working hours, whilst my father has struggled to find employment at his age despite a very respectable CV. They both don’t know what’s around the corner at their age, the uncertainty definitely plays a part in their spending habits. They appreciate the finer things in life that money can’t buy, like playing with the grandchildren. They both have the attitude of looking after what they have and, repairing things rather than replacing material objects.

        All of this aside, as Merryn points out, his opinion is one to be respected based on previous predictions. I think what he’s saying goes hand in hand with one of Merryn’s recent articles about rental prices. Not only do you have an elderly generation cutting back on spending, you have a younger generation priced out of the property market with less disposable income after ridiculous rental prices. This younger generation not only has less disposable income, less and less own their own home with any incentive to buy luxury consumer goods for their rental home. I have many friends in rental accommodation with no desire to decorate, buy nice furniture etc, because the resent the situation they are in and, see it as dead money.

        • Rear Admiral Sir Vincent Smyth

          The younger generation are the first to have such large inheritances. Typical legacy in the UK now is over £80,000.And that is after the various sums given for deposits, tuition, cars, new kitchens, childcare etc by parents and grandparents.Rich over 60,s means plenty of proxy spending.

          • FredFlinstone

            But these pensions are only for the few and the age they get them is rising.

            It certainly isnt 40 years old getting them.

            • Rear Admiral Sir Vincent Smyth

              Not pensions Fred. Legacies.These have quadrupled since 1996.

          • Obie!

            My parents need their money, and certainly aren’t on their death bed right yet! They aren’t rich, nor poor. They are middle class like the majority of the older generation. This is common amongst many or my friends in rented accommodation. They’ve not had inheritances or been given deposits, hence why rental demand has increased.

            Eventually, possibly, but as the article points out, age expectancy is increasing. Many of the older generation might have to draw on their equity to live out their later years after they down size. This wealth could easily evaporate though if we are heading into a deflationary period. We all know property is grossly over leveraged right now and, a correction is long over due. If property is heading for a 50% drop, this wouldn’t leave much for my parents retirement or, inheritance among myself and sister. Not that I would want to take they money anyway, I’d much rather they enjoyed their years without struggle.

            • Rear Admiral Sir Vincent Smyth

              But Obie, that is the point. Hodges is wrong, he fails to understand because he does not have a decent graspmof demographics. House prices will not fall 50% or even 20%. He is a scaremonger who needs to warp facts to suit his agenda.

              • Obie!

                I don’t know much about the chap, I’ve purely listened to Merryn’s opinions of him based on his last predictions, which does sound very respectable.

                All I do know is the government has done all they can to prop up the housing market and, refused to allow a correction/crash in 2007. They’ve have postponed any real correction and, have purely kicked the can down the road. How this unfolds is anyones guess. I personally believe this false stimulated recovery will end badly.

                Many home owners are well out of their depth. It’s said that 70% of home owners are on interest only mortgages, this clearly screams they can’t afford the home they live in. An interest rate rise will cripple many. The HTB scheme, shared ownership, increased rental demand, historical low interest rates and earnings ratios are all a massive warning signs that we are in bubble territory. I don’t know many people right now that don’t consider the UK property market to be vastly over priced.

                • Rear Admiral Sir Vincent Smyth

                  No. Not 70%. The CML figures for Oct 2014 show 2.8 million IO mortgsges out of 10.3 million. So 26%. Accuracy being my strong point, only 150,000 IO mortgages are due to mature each year . Hardly an impending disaster even if half default each year.

                  • robertsonjames

                    Hodges makes two mistakes which undermine the credibility of his forecast of a 50% drop in Uk house prices.

                    First, he exaggerates the impact of mortgage rates at the expense of other salient factors like supply and demand. It’s obvious that supply and demand are critical in determining house prices when similar-sized properties on similarly nice streets in Dundee and South Kensington are, despite both properties being subject to exactly the same UK-wide interest rates, fetching sums that are different by a factor of ten. If the interest rate charged on home loans were the most important driver of house price levels we simply wouldn’t be seeing the Dundee flat going for £50K and its South Ken equivalent selling for £500K. In fact most if not all of that immense gap is accounted for by huge variations in local supply and demand, which crash trolls persistently refuse to acknowledge are overwhelmingly the most important forces behind house prices.

                    Second, Hodges’ claims about a so-called “UK property market” which is supposedly in a bubble take no account whatsoever of local conditions which actually vary spectacularly. That Dundee flat which today is going for £50K would have fetched £70K in 2007: that’s a 30% drop in cash terms, even more in real terms, with no sign of it going into reverse. And that Dundee flat was and is affordable for first-time buyers at those kinds of price levels. So why, to use a term often preferred by those who see house prices as a moral rather than an economic issue, do we “need” a further 50% drop in the price of that Dundee flat? And why is fiddling with UK-wide interest rates an appropriate mechanism for managing “excessive” house prices in South Ken which are plainly not remotely problematic in Dundee?

                    • Eddie

                      You are quite right that prices are purely a function of supply and demand and there are significant variations in price around the country. However, while I desire to buy a property in South Kensington and not in Dundee, my desire does not affect demand in South Ken because I cannot possibly afford the prices. The people who can afford prices in South Ken are the same ones influencing the price of Lamborghinis and the prices are so high because they can afford them.
                      When we look at the generality of prices across more normal parts of the country, the question is “Is there anything that has enabled people to offer higher prices than they would have been able to in past decades?” If there is, then is this new factor sustainable? Looking at what £450,000 can buy you generally, is a 4-bedroom box in Croydon with a small garden likely to offer long-term value for money? As someone who was burnt badly in 1988 by thinking prices only ever went up, I don’t think the Croydon box would be a sensible purchase right now.

              • vk

                I think you are the person who is scared, instead of asking why, you just reject it out of hand.

    • mcray

      I think you are splitting hairs. Paul is making generalisations to support his points i.e. generally people over the age if 55 start to wind down and they have the experience to know that the good times never last…basically they remember the old fashioned habit of saving.

    • Anthony Adiga

      They ‘need’ cruises. 🙂 🙂

    • 4caster

      But Sir Vincent, you destroy your own argument. Retirees who provide deposits for their children’s homes, and tuition fees for their grandkids, by definition have more cash than they personally need. On the contrary their children need these subsidies.
      Since the great recession I think the above is true. Before then it was not true. Younger people were largely a hedonistic generation who thought nothing of maxing their credit cards out on the latest gizmos, having fun and decamping en masse to foreign parts for stag or girlie weekends

  • Glass Beach

    easy money + low interest rates + loose purchase taxes + high demand = high pressure on prices. tighten any of these 4 and prices will stabilize or reduce in line with the strength of the tightening. A 50% reduction in UK prices based on the global economy is poor journalism and pure fantasy at best, at worst its plain irresponsible

    • gareth2w

      I must admit I do wonder how high prices can go, but surely people’s incomes will have to be included in that formulae?

      The value of a currency is going down over time (as it has for the last 100 or so years) so any lender must make more money on any loan (and then some more for profits and costs).

      The price cannot therefore go up forever as the interest+capital repayment can never exceed what the buyer is earning. Earnings have been static the past few years in the UK while inflation has not so I think we are pretty well maxed out on prices today. The latest attempts at pumping the housing market up (discounts for new buyers) show this, they are really struggling to get people to pay more for an asset that is fundementally out of reach of too many people’s incomes.
      If we then lost one of the four variables you mentioned (left the EU = less demand) then we would certainly have a collapse, right now we have a recipe for stagnation, and stagnation+QE=deflation when measured in another currency.

      • Short John Silver

        QUOTE: I must admit I do wonder how high prices can go, but surely people’s incomes will have to be included in that formulae? UNQUOTE

        The prices – wages spiral only applies to the earning (and, therefore, potentially striking) population.

        Citizens such as pensioners, some of whom have incomes (pensions) not linked to inflation, suffer declining spending power. Note carefully that RPI and CPI are both inaccurate (blatantly dishonest?) measures of increases in the cost of living. Based upom my experince, the REAL increase in the cost of living is invariably higher than either index, with variations dependent upon lifestyle. So, even if you have an index-linked income, you will almost certainly still suffer if there is any inflation.

        • Rear Admiral Sir Vincent Smyth

          We only have deflation. As I said two years ago the deflation is coming. it has been here since 5th January and it will be very hard to get rid of.

    • Ross Nicoll

      You may be getting easy money, most people aren’t. I’m doing okay, but I’m also aware where my income lies in relation to averages, and honestly right now it feels like most of the market is existing homeowners selling to each other while taking on progressively more debt.

      Honestly not sure why more people aren’t leaving to places with cheaper housing, because right now that’s virtually everywhere.

  • Emailonly

    Leaving aside the pedantry wrt stats, I think this argument has some merit, although, to paraphrase one more famous than me, ‘markets (and politics) can remain irrational far longer than most rational argument can remain current!’ Taking account of £sterling devaluation it wouldn’t surprise me in the least if UK property fell 50% against a ‘global average’ when the money printing really starts!

  • Hi Merryn
    Without doubt one of the most enjoyable and informative interviews ever from Money Week.
    Many thanks

    To the Rear Admiral – My guess is that Hodges slipped on that stat. I suspect he did not mean 1 in 2 – but rather a 2 to 1 ratio – an easy slip of tongue I’m sure you’ll agree.
    Please let’s not let that detract from the very powerful message that deflationary forces are already at work.
    Very sensible thinking about downside risk to house prices and fascinating also that he’s out of Gilts for fear of capital risk.?
    And how about the idea of having politicians who start to tell the ‘truth’ to the electorate. I’m not sure it’ll catch on this time around but who knows

  • Warun Boofit

    I broadly agree with Hodges with many of his points but not that we are heading for a 50% drop in UK property prices, my crystal ball says maybe 20%. His share tips could be better, 10% on Unilever and 30% on P&G is not great. If he saw oil at 50$ a barrel why did he not tip IAG at £3 last year for a 77% return at todays price or something safer like SSE which gave a total return of 36% in 2014. I like the sofa analogy but really the sofa market has been disinflating for decades, you can buy the same one now for £500 that was the same price in 1985, its only misers like me that never buy new furniture, all the benefit claimants that I know are sitting on couches they paid £1500 for. If £30k a year is the average income in London it must be a really bad place to live for the average person, resign from Macdonalds and emigrate. If you dont mind the bad weather come to Donegal and earn the same as London but you then get to keep most of it rather than have to spend it on rent or mortgage.

    • Emailonly

      eratum…sitting on £1500 couches you paid for.

      • Emailonly

        et addendum… and you will pay £ooo’s more for when the £ finally collapses under the weight of government debt and zero growth (see above).

    • John Spindler

      thing is if we get to 20 percent fall the proof of the pudding is here…houses can go down ! As they probably are 50 percent overvalues against earnings regardless of interest rates(they are not going lower are they ?) 50 percent is logical….i don’t think so but i didn’t think the BoE would go to 0.5 bank rate…i didn’t think they’d have the nerve…guess they had no way out….so if interst rates go uo it will be like a spotlight on house prices and guess what 50 percent cold be likely…worse happened in Japan..90 percent falls…faith in property as an investment would be extinguished and a lot of leverged folk will be( insert profanity)…Harry Dent has been saying this is coming….

  • James Cross

    50% is a headline grabbing figure, but it’s based on an inaccurate summary of the 90’s house price crash, at least in the UK. The average house price fell from about £62k in Q3 1989 to £50k in Q1 1993, so 20%. What Paul Hodges is saying is that we might see a similar decline now. If so, that would take us back to the level of Q1 2009. Hardly the end of the world.

    • Emailonly

      Yes, and in 1989 you could get more than A$3 to the pound – now it is less than two – so there is another 30%.

    • John Spindler

      it’ll go down the same way it came up…speculated up..speculated down…deflation is the reverse of inflation….buy a house today..don;t miss the boat ! Or wait it’ll be cheaper tomorrow…once that kicks in…distressed sellers are going to be hurt….

      Look at it this way if this guy and Harry Dent are right…even if you don’t have to sell and can manage payments both capital and interest….you expect to be able to ride it out…but and here’s the but…this time it could be worse than the 90’s….the price may never come back in your lifetime…..then you can’t move …do anything if you are under water(negative equity) on the loan…if you are in equity fine…but many won’t be…we already saw a while back products allowing you to shift your negative equity loan…this was post 2007…when they postponed what should have been a crash…what do you think’ll happen next time…if it goes bad it’s going to do according to the market…the govt are out of tricks…their debt load(ours) is horrendous….also remember bail ins in cyprus they’ll do that here….these(insert profanity) would nationalise your pension if they had to…we are just the schmucks to the political elite…Cameron and Osbourne et al ‘s money is well hidden in Trust Funds and probably offshore(money they didn’t earn..inherited)…they won’t lose…

  • Paul Claireaux

    A 50% drop in property prices looks about right on my analysis.

    • Rear Admiral Sir Vincent Smyth

      So once the boomers are all retired,in 2032 you expect houses to cost about £130,000.Nonsense.

      • Ninebobnote

        No, they will cost the same as they do now, a moderate drop in prices soon followed by years of stagnation is the most likely scenario, with all the Asians who bought into the ‘mid-priced’ London market taking a massive haircut.

        • Rear Admiral Sir Vincent Smyth

          UK GDP is widely expected to double by 2045. With twice as much money about and not many more homes where do you expect the extra money to go if not into bricks and mortar?

          • John Spindler

            And they include house price rises as GDP ? What’s produced ? This can only go on so long…house price rise on a house already built is not product it is phoney GDP !

          • Ninebobnote

            In 1998 I bought my wife a car for £16,000. Last year I bought her a better car for the same price. My house, which, if anything has a less spec than it did in 1998 because it needs a re-vamp, has appreciated 3 fold. My salary has increased by about 50% in the same time.

            How much longer can we keep this up? Do you think those millions of under 40s are going to allow our generation to Ponzi off their backs for all time?

            You say there will be not many more homes in 2045? Why? Based on what? Policy will have to change. Supply will have to meet demand. Most UK homes are hugely inefficient. There are dying council estates in my town with a density that modern developers are looking on with envy. Who needs all that green space outside when you can get the Alps into you living room on a 60 inch TV?

            Houses are a speculative bubble waiting to pop. Government interference has kept the plates spinning for ten years now. A sensible building policy that builds 300,000 a year would be a good start along with a land tax and capital gains on primary residences. All these things will appeal to younger voters in coming years as ‘inheritances’ are whittled down by care costs. Please, get your head out of the sand

            • Rear Admiral Sir Vincent Smyth

              We haven’t built 300,000 homes per year since Harold Wilson’s day. As for CG on primary residences, laughable.

              • Ninebobnote

                Tell that to Boris Johnson, it’s the law in America.

                • Rear Admiral Sir Vincent Smyth

                  In which US states do they charge a gain on main residence? If it is US policy to build 300,000 homes per year that is not enough , t

            • Stephen Thomson

              The only reason asset prices have inflated to the levels they have is through the the theft of future generations’ wealth. This ability has reached it’s limit and for that reason prices will fall. It’s really that simple.

      • I’d prefer not to have words put in my mouth and then told they’re ‘nonsense’ !
        That’s not what I’m saying.
        Who knows what earnings will be in 2032? I certainly don’t.
        All I’m saying here is that as of today, house prices need to come down by about 50% to get back to something near the long term average relative to people’s earnings.
        This is the housing PE that’s all.
        Of course – there is another way that ratio could regain some sanity – and that’s for earnings to rise up over the coming years whilst house prices remained stable.
        But I don’t see that happening just yet.
        Indeed, it appears that there’s a BIG risk of the opposite happening and that we’re entering our first deflationary period for c. 80 years. And if that takes hold then even 50% could be exceeded.
        That’s why the central bankers are so frightened of deflation.
        yes, they’re concerned about the ‘paradox of thrift’ but they’re even more scared about crashing banks as fixed value debts default en masse against a backdrop of falling incomes and profits in nominal terms..
        I think what some people forget is that it’s inflation in this country that’s driven the inflation in house prices – whilst our £ shrivels away.

        They’ve not had such mad house price bubbles in Switzerland or Germany over the past 50 years – because they’ve not had the inflation. And we don’t have any inflation here now either.
        So i really don’t see what’s gonna pull earnings up to justify today’s prices.
        That said, when the UK and USA join back in the money printing game – who knows? That’s why it’s worth keeping a bit of gold in the portfolio too – for insurance against the flip back to inflation after the imminent dose of deflation.
        All very tricky this game of targeting 2% inflation i know – no wonder the bankers are talking about raising that target.

        • Rear Admiral Sir Vincent Smyth

          What are you talking about? There is no link between house prices and earnings and hasn’t been since 1992. Wealth and income buy houses, not wages. Houses will not fall 50% that is a ludicruous suggestion.

          • Hmmn – no link between prices and earnings eh?

            Well, go back a little further than 1992 and see how things revert to mean PEs over the long term.

            Likewise with stockmarkets. Here’s a great one for that


            And please try to stay calm and polite.

            • Rear Admiral Sir Vincent Smyth

              Only 65% of incomes are wages. Wages are earned by the poorest 70% of people. Houses are bought by the richest 60%. There is very little overlap except at the level of FTBs.

              • The poorest 70% eh. Wow!

                • Emailonly

                  Yes the bottom 70% earn wages, in fact many earn nothing at all. So why would they buy a house?

            • Rear Admiral Sir Vincent Smyth

              Why should HPs in 2020 bear any relation to those in say 1970?

              • Well, we agree that there’s a relation between prices and earnings for first time buyers – and surely these are the people that go on to buy the bigger houses so if demand there collapses then it might suggest . . .
                Of course buy to let investors have propped up prices for a while but me thinks the attraction will cool (if it’s not already) as the prospect of higher interest rates, and the fear of what Labour might do w.r.t. tax breaks starts hitting home. . . . .

                • Rear Admiral Sir Vincent Smyth

                  I do not agree there is such a link twixt HP and earnings. Certainly not like the neat clumsy grahs on your website. Why do they have horizontal base lines for HP to earnings ratio? We have all got much richer, more able to leverage, with more spare money and lower interest rates rather than the unusually high rates after theboil shock. The lines should be steadily rising diagonally towards the right. Since 1992 HP to income has been close to 6 to 1 with no prospect of a return to 3 or 4.

                  • Dear ‘Rear Admiral’
                    the only certainty i have is that the future is uncertain.
                    Yet you claim certainty.
                    I’m not aware that there’s anything flawed with my charts but am open to a coherent argument.
                    When pursuing your argument you might bear in mind that the Nobel prize winnner professor Robert Shiller has plotted real house prices in the USA covering a period of c. 100 years.
                    People there thought that house prices couldn’t fall catastrophically also – yet they did and that fall brought about the financial chaos or 2008-09.
                    USA house owners also thought there was some kind of ‘upward trend’ that you talk about.
                    That was until 2008.
                    Now they know different.
                    Please look carefully at Robert Shiller’s data – much neater than mine! – and see how their house prices are now at the same level that they were c. 100 years ago in real terms.
                    Why do we think that they should steadily rise in the UK. I guess that comes down to supply issues – and the age old arguments about us being different and being on a small island etc.
                    The trouble with that argument is that it didn’t stop the collapses in the 1970s or the 1990s and it won’t prevent this one.

            • ketts

              Hodges said he is not a financial advisor. He got some stats wrong, maybe MoneyWeek can dig out the correct ones for its readers. Was he refering to London when he said house prices would fall? Seems obvious older people need less, I’m one of them but I spend on things that make me happy, time with my children and frends and travel. If and when I retire I am sure I will be more careful with my money as my salary will be not be topping up my bank account every month. I’m taking his thoughts generally and in that way it makes sense even if the numbers and % are not exact.

          • Stephen Thomson

            Since 1992 eh? My, there’s a lot of data to go by lol

            Sooo, what are wages if not income exactly? If it’s just wealth that buys houses, why is it we have a mortgage market exactly?

            As a side note, I’m not sure whether/why you felt that your naval rank and designation is sufficiently relevant to these forums to be provided in full, perhaps you’re military standing and career built upon state funding should add credibility to your economic opinions?! Surely not.

        • Stephen Thomson

          The 2% target is a piece of nonsense anyway. There is ZERO evidence to suggest that money printing can promote long term growth and ZERO evidence to suggest that 2% should be some magic number that gives a beneficial level of inflation. It just happens to be a number sufficiently zero for central banks to aim at such as to avoid slipping into deflation (hmm) and thereby the increase in the value of their massive debts, but not so big as to completely destroy their credibility and currency so quickly as to be obvious enough to destroy consumer confidence.

          We are fast heading towards a world in which prices are once again determined by what people can actually afford and in that environment artificially supported property prices must fall.

          • Agree with that – and that affordability seems likely to get worse from here – either through rising interest rates or falling nominal wages if deflation takes hold.
            I can’t see another prop for houses now – and can plenty of politicians ‘circling’ in readiness to take more tax from these assets – albeit at the top end.

  • gareth2w

    A very compelling read. The one bit I would disagree with is oil, it was in a shortage when the price went up, countries did fail to get oil at a price they could afford. The whole “arab spring” was caused by high food prices which in turn were caused by the oil price spike, and several countries saw their economies collapse.

    We went from desperation where countries were effectively out bidding each other to oversupply where all of a sudden the buyer was in control to an extent, part of that is due to the high prices causing people to change their behaviour over time (e.g. Italy uses significantly less oil now then in 2008 despite higher population) and part is due to the fracking revolution in the US.
    Now they have backlogs of wells to complete and the price has collapsed (as it should do when there is a large over supply). What we will see next is much of the new oil supply taken offline because it is too expensive and the supply drop below demand probably by the end of the year. Oil supply in the future is only going to get more expensive.

    Then there will be another spike, all the worse if companies believe $50 is the new price, that spike will probably result in the next round of QE and it will also likely destabilise financially insecure non-oil producing countries (at least the ones that are not basket cases today!).

    I believe this article is right though, the QE money will go into government spending resulting in modest inflation, but they are limited to what they do as they cannot cause too much or the currency collapses, but overall people will be spending less due to demographics (and also the uncertainty of the past crashes).

  • Marc Cram

    I could see 30 – 50 % falls but it will be real falls and not nominal, so the prediction is not much use if you are trying to time the market with a large deposit earning no interest.

  • davidb

    So true my wife and I are mid sixties with a paid for house and cars, income £17000 a year expenditure £13000.

    • Rear Admiral Sir Vincent Smyth

      But your life expectancy is 87. Your house and car will need years of maintenance and meanwhile due to your longevity another house is taken out of the supply side for decades.

      • GVB

        But what about all the properties that have been aquired by the ‘buy to let’ landlords that will probably never appear on the supply side ever again as they are handed down to their children

        • John Spindler

          what do you think would happen given this scenario ? Interest rates rise substantially(event occurs…interest rates rise to protect pound)…House prices plummet….negative equity on BTL, high payments not covering rent….raise rent ….cannot find tenants….the BTL Landlord is then (insert profanity of your choice) !

          How many of those BTL properties are paid for ? Not may I’ll wager….

          The current situation is good for homeowners and BTL…but there is nothing I can see that will improve their position going forwards…there are only pitfalls…it’s just a matter of time now…the worm has turned…the first signs are already there…

      • John Spindler

        Credit availability determines house prices…nothing to do with supply….with the exception of Millionaire row paid for in cash…most of the market requires credit…credit obtainable determines ability to bid prices up/down….it’s a myth just as in the article high oil price was seen as demand…it wasn’t and now the reckoning has come….all those who invested in Shale Oil co’s in US are losing their shirt….if you are leveraged on property the economic landscape is so unpredictably stacked against you now… are probably on a losing bet…

        • Rear Admiral Sir Vincent Smyth

          Credit yes………and land value.

      • Ninebobnote

        He has a £4k a year surplus, that’s a new compact car every two years.

  • brianm101

    Three important points that are missing.
    1. Overall population is increasing – that means demand

    2. The ‘new’ retirement brigade are not you pensioners of old, they are a new breed, so dangerous to presume they won’t spend or even carry on working.

    3. The impact of technology on work

    Will house prices crash 50%, yes of course it could happened but given population growth and expectations I suspect not in general terms.

    • Ross Nicoll

      Population demand is only an issue because we’re not building enough. That’s primarily constrained by green belts; England is around 10% urbanised, the UK overall around 7%. At some point the younger generation who is being told they constantly have to pay more and more for housing will be enough of a voting block to enable building on green belts, and the pressure will disappear.

      • John Spindler

        I hope that happens…and by getting rid of the monarchy and ahem..relieving the crown and Duke of Westminster’s stranglehold on Land…we might become a fairer society…why we tolerate these privileged parasites is beyond me ? And please don;t say tourism…France hasn’t had a Monarchy since Louis and they rake in more from their past monarchy tourism than we do…Versailles et al….and is if that was reason enough to tolerate this inequality of birth..

    • Obie!

      As they say what goes up must come down. There’s no such thing as free wealth. This false stimulated recovery will likely correct at some point in the future. Property is completely over leveraged right now in comparison to earnings and, has more or less been on a bull run since the 90’s. I think what he’s saying could carry some weight.

      • Rear Admiral Sir Vincent Smyth

        No it isn’t. Houses are cheaper than any time since 2002. In the nineties property was unprecedentedly cheap.

        • Obie!

          Cheap compared to prices now or earnings?

          • Rear Admiral Sir Vincent Smyth

            Cheap compared to incomes.Cheap compared to wealth. The ratio house cost to income is the same as 2002 and 1989. The percentage of take home pay devoted to house purchase is also the same as 13 years ago. This suggests no bubble.

            • Emailonly

              Is that interest-only?

              • Rear Admiral Sir Vincent Smyth

                The cost of buying a house is all costs, capital , interest, taxes, fees etc.

            • Obie!

              If they are so cheap now, why do we have shared ownership, HTB, increased rental demand, and historical low interest rates? Endless parents find their children living at home well into the late twenties. How does this compare to 1989? Mortgages applications are still down despite all the ridiculous schemes and, low interest rates. The average first time buyer age has steadily increased, yet you say houses are cheaper…

              Wages have been flat for 10years or more, whilst we’ve had the government trying to inflate it’s way out of debt. Everything is more expensive based on this alone. We are all poorer.

              I sense from your comments Sir Vincent that your a home owner? A home owner that’s desperate for this ridiculous ponzi scheme to continue so you can feel wealthier as you home inflates in value. Your views are no different to the desperate politicians that have the same hidden agenda with their own investment properties. The governments agenda of inflating houses prices to create the ‘feel good’ factor before the election has certainly rubbed off on you. It’s apparent in all your comments you genuinely believe house prices are perfectly normal, and even consider them ‘cheap’. You’ll probably find that ‘cheap’ lending is the only thing driving the market at the moment as investors get a better return on their money with BTL investments.

              For the good of the economy, a housing market correction is long over due. As it stands at these levels we are on a one way ticket to another banking crisis as thousands are getting sucked into buying already over priced homes they can not afford in the belief this bubble will go on for ever.

              I think Paul has pasted a comment below to help with your debate about statistics…

              • Rear Admiral Sir Vincent Smyth

                Obie, like 67% of us I own a home. I report facts not personal preference. Houses are as cheap and in 2002 but income and wealth is more unequally shared. So some of the rich can buy 3or4 houses each and the average Joe now struggles. Problem is it could mean even with the 1% getting half the income ,there is still the same amount available to buy houses, just not as many recipients of the income.

        • John Spindler

          Rubbish !

          • 4caster

            It’s not very constructive to cry “Rubbish!”. I can see little if anything wrong with the post.

    • John Spindler

      credit determines house prices….demand is irrelevant…

      For anyone who doubts this….understand this …relaxing credit is what drove the prices up in the first place ! Don;t you think there was demand for housing in the 50’s after so much had been destroyed in the bombing ? But the banks hadn’t been let off the leash….then..

      • Rear Admiral Sir Vincent Smyth

        It is more to do with land value than credit.
        Only 10 million mortgages on 26 million homes.

        • 4caster

          I agree. The rise in real inflation-adjusted house prices over the last two generations can be attributed to scarcity of building land. The value of existing bricks and mortar is closely related to new building costs, which vary in proportion to raw material and labour costs, in real terms, from generation to generation

  • C Narbeth

    One of the best interviews of the past few years
    At last a sensible discussion about persistent deflation rather than rampant inflation
    It would seem we are “turning Japanese” after all
    The irony is that Japan’s Lost Decades have only really been lost for the wealthiest 1% who have seen their property empires and portfolios of stocks decimated, the average Japanese is still living very comfortably, in a country with one of the lowest Gini co-efficients and declining inequality.
    Bring it on for UK & US & Western Europe

    • Rear Admiral Sir Vincent Smyth

      A sensible discussion based on incorrect statistics.

  • mcray

    Difficult not to agree with most of Paul’s observations especially the fast approaching UK property crash.

    • Rear Admiral Sir Vincent Smyth

      What about Paul’s observation that the UK had a babyboom in the 1950’s ?

    • Emailonly

      What about Paul’s observation that house prices fell by 50% in the 1990’s?
      What about Paul’s observation that half of UK adults are over 55?

  • Paul Kearney

    This is a fascinating interview, and the general thrust is spot on. However, the demographic situation in the UK is influenced by migration from southern Europe. In addition, it would be interesting to hear what he thinks about the Eurozone.

    • Rear Admiral Sir Vincent Smyth

      Would you like his opinion based on facts or mistaken supposition?

      • John Spindler

        I’ll take his mistaken supposition over your facts……

  • Peter Brand

    Paul Hodges made me reflect on a potential solution.

    Consider the list of problems that many countries face:

    – huge debts

    – import/export of inflation (or deflation)

    – foreign exchange volatility impacting the domestic markets and interest rates

    – lack of trust in bank, political and government control over our currency

    – etcetera…

    It seems very much an unfair battle between the man-in-the-street and the masters-of-the-universe.

    A simple solution would be to have:

    – 2 different currencies in each country, the real Pound and the Financial Pound for example. We would use real Pounds to pay for a pint in the pub, but all financial instruments like: our mortgages; the GDP; Taxes; foreign exchange and most of all, all the debt held by banks and central banks, would be in Financial Pounds

    – Tomorrow the rate could be set as 1 real Pound = 1 Financial Pound

    – Very quickly our trust in the Financial Pound would be reflected in the exchange rate, and the Monopoly players would be able to go away and play with themselves.

    Solve the Grexit problem? Sure, a Financial Drachma linked to the Euro plus a Real Drachma for the new people’s government. Shame Switzerland did not think of that.

    Will my mortgage fall in line with a fall of up to 50% in house prices? You betcha..

    Will banks finally start lending? yes they would love to be repaid in real pounds.

    Has it been done before? Yes, it was done for different reasons in the past, but it is now being posited as a potential solution for the ravages that Forex has on a domestic emerging economy…


    • Paul Hodges

      Thanks for all the comments and the debate. Perhaps it would be helpful just to clarify a few points which have been raised:

      1. UK births averaged 901,000/year in the 25 years between 1946-70, versus an average of 784,000/year in the 25 years from 1921-25. They then averaged 784,000/year between 1971-2000. The official ONS data can be found at . Across the G7, as I describe in the interview,
      the babyboom also lasted between 1946-1970, meaning that the average Boomer was born in 1958. Official data also shows that household spending peaks between the age of 25-54 years, and thus the average Boomer entered this cohort in 1983.

      2. Spending data. Analysis of household spending data (worldwide) shows that peak consumption occurs in the 25 – 54 age group. Those under-25 are often still at college or in relatively low-paying entry level jobs, and so their contribution to GDP growth is small. Equally, spending falls away quite quickly after the age of 55, as I describe in the interview. The crucial metric, and I apologise if this was not clear, is therefore the ratio of 25 – 54 year olds (the ‘wealth creators’) versus the 55+ cohort. The numbers of those in this 55+ generation will have doubled to a total of 1.1bn in the world’s 10 largest economies between 2000 and 2030, according to UN forecasts, due to the unprecedented increase in global life expectancy since 1950 (it has increased an astonishing 50%, from 47 years to 71 years). The halving of global fertility rates over the same period (from a global average of 5 babies/woman to 2.5 babies/woman is thus inevitably creating an ageing global population. The 55+ generation is already 47% of the over-25 population in Japan, whilst the UK will have a ratio of 43% within 10 years (UK fertility rates fell steadily after 1970, and were just just 1.66 babies/woman in 2000-2005, well below replacement levels of 2.1 babies/woman). More details are in two Financial Times blog posts, and

      3. House prices. Nationwide data shows that London house prices fell by 43% between 1988 – 1993 if one adjusts for inflation, as I believe is essential. Nationwide data also shows that in 1988, the ratio of London house prices to first-time buyer earnings averaged 5.6x, and the ratio for the UK as a whole averaged 3.4x. Today, those averages have risen to 9.0x and 5.0x respectively. My concern is therefore that today’s young people have simply never known a period when house prices suffered major falls, and so may not understand the risks they are running by buying at today’s elevated levels. Of course, others are fully entitled to argue that these instead represent a sustainable ‘new paradigm’. I worry, however that ‘reversion to the mean’ is normally the most profitable investment policy. I therefore think it is only being responsible to highlight what I see as the clear risks now associated with house prices at today’s levels.

      • Jack Blair

        Thanks for reverting Paul. Its one thing stating something in an interview and disappearing and quite another coming back and dealing with the points raised. So thank you.

        I have two questions, both of which have travelled beyond the scope of party political debate

        1, what of “overseas investors” investing in UK because it means their cash is safer than in their own country where it could/might be taken away from them, the growth in house prices in merely a consequence

        2, isnt it the modus operandi of the people who really run this country (whoever they may be) to keep people in high levels of debt as a means of controlling the population by stealth? Therefore a chnage in policy is unlikely?

        I would love debate on these two questions.

        Finally, I am appalled (if it is true) that the top 0.x%, the Super Rich now have over 14% of the wealth of the country and that those who run the country think this is a great way of keeping GDP positive. So let me get this straight, 99.x% of the country have to suffer falling standards in living so that a GDP number that has no basis in reality can be kept positive? Have we taken leave of our aggregated senses?

      • Emailonly

        But using averages over the period 1945 to 1970 hides the unremarkable birth rates of the 1950s. The only times to see over 900,000 births were 1946/7 and all of the years 1960 to 69.
        You said HPs fell 50% in the 90s , but now backtrack and say in London between 1989 & 1993 they fell 43%, but not elsewhere.You also say more than once that near half our adults are over 55, but only if you pretend adulthood starts at 25, even then it is only 43% who are over 55. This all smacks of shoehorning the stats to fit a preconceived idea.

      • Emailonly

        The average US boomer may have been born in 1958, but in the UK it was 1965. In the UK 1958 had fairly typical births much lower thsn 1947 or 1960 to 70. Why can you not accept there is no grest bulge of impending retirees until 2026 onwards.

  • Short John Silver

    Superb! Seems to me that Paul Hodges might qualify as an English version of Bill Bonner. All we need now is a UK administration with the same clear, correct thoughts.
    Fat chance. As it is we will be perpetually lumbered with a motley bunch of short-termist buffoons whose primary objective is to secure and maintain their undeserved ride on the taxpayer-funded Public Sector gravy train until they’ve stuffed their own egos and nests as tightly as their massive greed demands.
    I DESPISE the lot of them, regardless of what label they stick on their over-inflated chests. They are ruining our lives and, to prove that they don’t care a hoot, they will entirely destroy our lives with the hyperinflation that they WILL create to all-too-easily rid themselves of the massive debt they alone created.

  • mcray

    Whatever anybody says this government cannot support asset price bubbles for much longer in this deflationary environment.

    • Rear Admiral Sir Vincent Smyth

      Yes it will. Loads of Greek riches heading our way soon and still we suck up to the Saud family.

  • Simon Gould

    He says Germany are reducing the pension age! That’s rubbish, they are increasing it over a sliding scale. A 47 year old will need to work until 67 and younger people longer.

    • Emailonly

      He says what he likes. If challenged it is deleted.

  • John Brown

    Very interesting. But a lot was not discussed. Automation is now ubiquitous with robots doing all the repetitive work in manufacturing. If not robots, then Far East workers.
    Virtually everything except cars is now assembled in China (even big chest freezers) at paltry wages.
    Homes are now thoroughly insulated and energy usage has dropped. Where there is no gas and only electricity, efficient heat-pumps, which now work in our climate, are economic. There is a vast Europe-wide rail network, again with reduced energy demand, and many bridges and tunnels have been built. Refrigerated trains bring crops from Spain, where land-productivity is higher due to climate. Super-big and efficient ships support cheap long-distance imports and food from around the globe. On the Web, music and videos are now downloads with virtually zero production costs. Web purchasing and efficient multi-delivery vans have contributed to deflation. Digital and satellite TV use less energy.
    Cars last longer. My old van lasted 15 years and the 8-year old replacement should easily do 7 years, since after redundancy and early retirement, I travel only 2,600 miles per year.
    We should offer the working-generation a shorter working week, to enjoy the leisure that technical advances always promised. I suspect pensions will be cut to pay for this and to offset the demographic bulge amongst the retired.
    But will house prices (outside London) really drop 50%, given that new building is still very much reduced?
    A writer in MoneyWeek pointed out that around 30% of Gilts have been sold by pension and insurance companies, and bought by the BofE, which therefore will never have to pay them off at maturity. For graphs, see
    So we are really quite a long way off Greece’s situation, and T-bonds might continue to be rolled over at low-interest rates for a while yet. So house prices might stay up for a while.

  • BoiledCabbage

    But deflation is not just falling prices for sofas, its banks failing, companies failing, bankruptcy everywhere, homeless, crime, more like Greece than Wiltshire.

    So where do you park your cash?

  • Daniel6500

    A very interesting and detailed conversation.

    Apologies if I missed something but…a quick question in regards
    to the point made about holding cash for a deflationary outcome.

    Umm…what does this actually mean?

    Does it simply mean taking cash out (of stocks or bonds) and putting it into an ISA or some other fast access account?

    Thus allowing for options to buy up cheeper assets when prices fall?

    …if they fall…

    Thanks for any information.

  • John Brown

    In 2011 the Telegraph wrote:

    “The research found that paying cheaper accommodation costs substantially offsets the average yearly average £4400 cost of a train ticket.

    According to the research, property prices about an hour’s commute from central London, in cities such as Peterborough, Manningtree, Swindon and Rochester, were about £245,000.

    This was in “significant contrast” to the average property value in central London, which was about £620,000.”

    From the TV I get the impression that rail fares have inflated as much as house prices.
    On a 3.6% mortgage (on 65% of value), saving the rail fare would allow you to borrow an extra £122K. A bottom-end house in Newham in London is £230K. If this halved to £115K, it would be snapped up by youngsters currently living in the suburbs with their parents and commuting to London.
    Fuel costs are a relatively small proportion of rail running costs, and the rail workers have to live somewhere.
    I can see a 20 to 30% drop in London house prices, but not 50%.

    • Emailonly

      London is only 15% of the UK.

      • vk

        yes but London is the property market we are talking about – I think you are missing the point

  • Emailonly

    A lot of posts quote the nationwide index which is at £180,000. Mr Hodges thus implies UK house price is likely to fall to £90,000 shortly. This is simply not credible.
    I see 18 posts have been removed. All questioning Mr Hodges veracity. I can only assume MW sees Hodges wild exaggerations as the new End of Britain report so woefully wrong in the past.

    • e2toe4

      There was quite a bit in the article saying this situation wasn’t an *End of Days* situation. The financial talk was of deflation but the discussion wasn’t that this would then necessarily cause waste , famine and pestilence to stalk the land.

      I sit on a couple of employers panels in North East England and have lived through most of the period you are talking about.

      I believe statistics are not unimportant but I also feel that they are so many variables within them that they don’t entirely destroy the relevance of the lived reality.

      I bought my first property in the late 1970s (I am not a property speculator except to the extent we have all been encouraged to a degree to see ourselves as such over the last 3 or 4 decades) when I was a young person just five years into my career.

      There was all then paraphernalia of the Loan Value Ratio and what have you but I was able to afford the place which cost around two and a half times my then gross salary.

      In the business area I am in, the equivalent salaries today are about 5 times the salary I was on back then, for the equivalent person, say 6 times max if you like, that is as far as anyone could push the multiple..but that same property is around 12 times more expensive today and often more.

      For a while in the late 90s into the early years this century that gap was bridged by loans granted larger than the house price, Northern Rock’s 125% example being the most egregious example perhaps.

      We know where that attempt to support property prices ended up.

      My obvious point is whatever your statistics tell you about property prices and affordability, I am very unlikely to ever be convinced because my own lived reality shows me something different.

      None of my young staff, many older than I was then, own flats, many rent in HMOs with shared kitchens and living spaces, even bathrooms.

      It’s quite common for people well into their twenties to continue to live in the family home…. I will rephrase that, it is very common.

      So, for me, there is a mismatch between the data and stats, and the lived reality…I’m not saying the stats are wrong as such, or that I think prices have to pop, just that I incline more to the views presented in the article then to yours.

  • beenthere

    Has anyone else noticed that in some areas it is possible to walk down a road and not hear a single English conversation? Eastern Europeans, Asians , Africans risking their lives to get to this country because it is so attractive to them are not in their 50’s, but their 20’s. Keep the borders open to immigrants, stop villifying them but allow them to bring their skills and energy to the British workplace and this supposed problem of not enough young employees disappears.

  • vk

    I wish to thank Mr Hodges for most of his comments on the UK economy which make far more sense than what is normally found. I would be very interested to hear the reasons why Mr Hodges believes there may be a 50% correction in UK housing stock. Sadly the interviewer did not ask for clarification of this very interesting point.
    Many people can see that the top end of the London market is already clearly falling. Commissions at Foxtons fell 26% for the same period last year and not all of their sales are top end. Yet the developers continue particularly those developers looking for the foreign market of wealthy investors. Developers are currently building 54000 units at a time when prices are falling. The maths on that particular market is not hard to predict. However, estate agents always continue with the “it’s alright’ nonsense until the proverbial stares them in the face. My question if it can be asked of Mr Hodges is, what will it take to see the 50% correction or has that process already started?

  • DemiGod

    A proper period of deflation would cause too much pain and would be engineered away, more cans punted down the mad ‘new normal’ road.

  • hohum

    The deflation myth….. Its a fact that consumer electronics products like computers and televisions have continually fallen in price year on year; yet sales boom. Manufacturers build in obsolescence into all their products forcing repeat purchases. deflating prices will make no difference to consumers wishing to follow the latest tacky Fashion or get the latest useless gadget.

  • Greg

    I’m finding it very difficult to reconcile being worried about deflation, and in the same breath talking about how central banks may well cause hyperinflation. The 2 are worlds appart. The BOE has “ignored” their inflation mandate for 5 years now and focused on growth and stimulus, quite obviously at the risk of toying with hyperinflation. Some would say they are extremely lucky that they were able to give life support (low rates and QE) for so long and then started benefitting from lower oil possibly at the right time. Now we are legitimately concerned that we could end up with deflation, one of my own biggest fears given I am heavily inflation hedged. But why NOW after 5 years of easing are we worried about hyperinflation, when it probably would have happened by now. Can someone explain??
    I agree with the ageing population argument largely, and clearly Mr Hodges has made some good calls in the past, but I think there are some holes in this anaylysis…

    • Stephen Thomson

      My understanding is that deflation is ultimately what must him prevail as it the only means by which the credit but can deflate and so that is exactly what comes next. The only question is whether or not we have some inflation/hyperinflation before that deflation. The reason inflation comes into the equation at all is because:- technically it means only an increase in the currency supply, which of course is what western central banks are currently engaged in, but is more readily understood by Joe bloggs to be an increase in consumer and asset prices, which is a actually a symptom of the “disease” of inflation (the actual increase in the money supply). So the doubt over whether we are destined for inflation or deflation is really a question of whether we will go straight to deflation or have a period of inflation then deflation. Governments and central banks despise deflation because it increases the value is their debts. They believe that printing money can avoid the inevitable deflation that follows a credit bubble, when really it can only postpone it while increasing the impact of the deflation to come. Whether or not we see price inflation (the lay persons idea of inflation) during the course of that increase in the money supply is determined by the velocity with which that money supply moves through the economy. The faster the money moves and the more if it they print the greater the rate of price inflation. At present we have low velocity of the money supply – much of the money printed remains parked on back balance sheets. Should that money (or future printed money that they are bound to print) find its way into the mainstream economy, the rate of velocity will increase. So basically the price inflation can only occur if the extra money printed is allowed to chase the same goods and services that the existing money supply is already chasing. Because governments and central banks are so utterly convinced that of they print enough money andy produce enough price inflation they can increase the rate of growth of economies so ad to avoid deflation entirely, it seems to me that inflation may come first, as they will print and print and print until they get the price inflation they want, before they realise that they have been unable to avoid deflation in the end anyway. So inflation first, then deflation, for the simple reason that they are able to create that in the sorry term of they try hard enough, and because they believe it will avoid what they fear most, which it won’t and never has.

  • somewhereinthesouth

    Not sure about his argument even if they are interesting. yes 60 year olds may well spend less BUT the rich ones will pass wealth to children – many before they die. At the same time the uk population is RISING faster than it has for a very long time. The rise in londons population is going to be huge and theSE isn’t far behind. this rise is being driven by immigration of mainly YOUNG people , a big rise in births and of course by ageing, these factors will probably increase demand on balance.
    i do agree that gilts aren’t a good bet since any rise in rates will result in price fall and the same may well happen with housing, although the demographics and limited supply will negate the fall in house rices. if rates do rise, it wont be much – may be 0,5% for say four years , so rates will still be very low low. deflation is a reason to hold cash but i can’t see deflation taking hold – oil price fall will level out – although the eurozone does look like a potential disaster area . however QE MIGHT soften the problems but not if GREECE defaults massively. On the other hand banks are in better shape. So overall …the arguments simply `aren’t as black and white as suggested….

  • rosross

    I realise it is a common mythology but human beings are not living longer than they have lived before, there are just more of them and more living in developed countries, where high infant/maternal/child mortality rates no longer apply and which when they did apply, seriously skewed longevity numbers.

    Take an African country for example where the average age for longevity is 42. This does not mean that most die around the age of 42! Many live into their seventies, eighties and nineties as they have always done but fewer do because many die as infants and children and more die younger because of poor sanitation, nutrition and hygiene, as they once did in the West. HIV/Aids is a scourge but more so because of poor sanitation, nutrition and hygiene.

    This commonly believed error in regard to longevity is yet another indicator of how often we get things wrong because ‘factors’ are used which are no longer relevant.

    Comparisons for longevity are made between today and times in the past when poor nutrition, sanitation and hygiene meant many babies, children and mothers died in childbirth. It is, like other things mentioned here, erroneous information.

    Yes, we now have more people living to older ages but that is not because people are living longer but because there are more people who survived childhood in ways they often did not in centuries past.

    And it would be just as unwise as the other projections cited here, to assume that future generations will have as many living as long. We do not yet know the impact of mass medical experimentation in the form of vaccination in particular but also IVF procedures, ultrasounds and intervention in pregnancy; drugs and interventions in labour, i.e. elective C-section which it is now being discovered, too late, leads to compromised gut function which leads to compromised immune function and poor health; overuse of antibiotics which leads to compromised gut function which leads to compromised immune function and poor health; over-processing of food with high levels of chemical additives, colourants etc., which compromise health; high levels of medication in children and adults which research is showing compromise health; high levels of drugs in the food chain and water supplies, particularly synthetic oestrogen from the contraceptive pill which may well be contributing to the high levels of infertility now seen, etc. etc.

    We may well find, given that the mass medical experiment got underway in excessive form around 50 years ago, that the generation now in their forties and fifties might well live into their eighties and beyond, but the generations following on may be lucky to make their fifties.

    In other words, the devil is in the detail and simply taking a set of circumstances which apply to now, as articulated in this article, can set us on a path to disaster.

    We now have levels of serious and chronic disease in human beings at levels never seen before and higher in children. We have young people experiencing heart disease and strokes at levels never seen before.

    We have cancer rates of one in two today compared to more than one in ten a century ago and the biggest killer of children and young people is now brain cancer along with spinal cancer.

    We have epidemics in our children of Autism, behavioural and learning difficulties, Asthma, allergies, Coeliac Disease, Diabetes and given the importance of health in childhood in regard to health as adults and longevity, it is a HUGE assumption that children today will live as long as their parents or grandparents.

    The reality is more likely that the current older generation and their children will see many people living long lives, but the younger generations may well have substantially shorter and sicker lives, which would create problems of massive proportions for everyone.

    Planning for various possibilities and erring on the side of caution would be wise.

    • sabelmouse

      good points.

  • billed

    Wait till after the next General Election in Britain when Labour ctushes to Victory then finds that National Health Service has been sold off by increments off PDF Contracts.