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Friday, 18 February 2011

An SMS from Ernst: Short Messages Service (4)

The Financieel Dagblad writes (link in Dutch): 
According to the Neprom (the Dutch association of project developers) last year 26,000 newly built houses have been sold in The Netherlands.This is about 50% more than in 2009. 
Especially sales in the inexpensive segment were soaring, enabling starters on the housing market in 2010 to leap from a rental to an owner-occupied house. The Neprom expects that this will be not the case for 2011, as the interest rate is mounting and banks increased the demands for handing out a mortgage to starters. 
According to the association the project developers profit from the possibility to adjust their products to the demands of the market. This is of course harder for owners of existing houses. 
Figures originate from the 'Monitor Nieuwe Woningen' (New housing monitor) that is executed quarterly by Neprom and the Ministry of Home affairs. The figures are especially remarkable, as according to the UWV (the Dutch authority supplying Unemployment Benefit) in January 2011 33% more construction-workers were unemployed then in November 2010.

At this time I don’t believe ANY number concerning the housing market. These numbers are often the results of make-believe, wishful thinking and hidden agenda’s of all parties concerned, like realtors, the large banks, the Association of Houseowners and (in this case) the Neprom. That these figures are put together in cooperation with the Ministry of Home Affairs does barely help.

I do however value the unemployment figures concerning construction-workers from the UWV, as these are not meant to be a good-news-show. And those are alarming.

The housing market in The Netherlands is still locked tight and as long as nobody changes the circumstances around it, nothing will change there (see Prime Minister Rutte, Kill your darling). What I want to happen is:
-      The Dutch government abolishing the Mortgage Interest tax break.
-      Mortgage banks getting rid of defaulters, instead of pampering them into oblivion, afraid as banks are of write-offs on their collateral (and their balance sheet).
-      Price reductions on new and existing houses, leading to a healthier situation on the housing market

The Financieel Dagblad writes (Link in Dutch):

The 5Y interest rate of Portugal exceeds the 7% margin on Friday, making it even harder for the troubled country to refinance itself. After interest was soaring around noon, the ECB intervened by purchasing Portuguese sovereign bonds. 
Interest is soaring due to the continuing uncertainty about the financial position of the country. A bond trader associated to a Dutch bank remarked: “when the interest curve of a certain country is above 7%, it is extremely hard to sell new sovereigns. The longer this takes, the bigger is the chance that Portugal should make use of the ECB emergency fund.” 
For many analists it is not if, but when Portugal should make us of the emergency fund, like Ireland and Greece before them. The previous issues of sovereigns this year should enable Portugal to meet their requirements until April. It is improbable that Portugal will knock on the ECB’s door before this date, according to Ioannis Sokos of BNP Paribas. Remarkable is that the interest in other weak countries like Belgium and Spain is hardly rising.

To react to the last line of the quote: countries are picked one at the time. Portugal is seemingly the biggest problem now, but be sure: the rest of the weak countries will follow. If the ECB keeps protecting the bondholders and keeps bailing out every weak country, this might go on for a number of years, until the last country standing drops (Germany, The Netherlands).

Now Axel Weber, senior executive of the Bundesbank, has left the election for ECB chairman, the odds are that the new chairman of the ECB might resume fighting the losing battle of bailing everybody and their sister out, instead of enabling a haircut on bondholders.


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