With high inflation, interest rates hikes, debt bubbles set to burst, rising house and car prices, things are looking bleak – John McLellan
But while I agree with much of Donald’s analysis about Edinburgh’s impressive physical regeneration, it’s more likely that flash wheels on every second driveway are less a sign of growing prosperity as very cheap credit and loaded repayment terms.
High inflation is calling time on the credit party, but it might also prick the massive debt bubble building up behind the pre-pandemic car sales explosion, built on personal contract purchase deals with low instalments but huge final payments which created vicious circles of trade-ins and new loans.
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Hide AdLack of supply has pushed up prices of both new and used cars and the same has been happening with houses for years, but rising interest rates mean the long era of borrowing at a cost which 25 years ago was unimaginable, is over. So too will consumer goods become more expensive as zero per cent deals disappear.
Demand for housing won’t cease, not least because of more single households growing from the existing population, but with the average Edinburgh house now costing £255,398, seven times the average salary, disposable incomes will be hammered.
And at £30,000 over the ten per cent Land & Buildings Tax band, average buyers must pay the Scottish Government £25,000 as well as find a deposit.
From optimism in January, 2022 is fast becoming a year to forget.
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