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this is al 0 is your top stories. russian forces led by mercenaries from the wagner group say they have gain control of the east and ukrainian town of solider. cave has denied the claim. facing the area has intensified in the past days as why she tries to gain ground. that us, the voluntary is the know the terrorist state and its trip again this, i tried to pretend that some part of our city of solid are almost completely destroyed by the occupiers is some kind of rush us achievement. they will present and are already presenting this to their society in such a way as to support the bungalows ation and to give hope to those who support aggression. but the fighting continues. the diets direction is holding out and re without a break even for one day do everything to strengthen the ukrainian defense for flights have resumed in the u. s. soft, a technical glitch which saw thousands of planes grounded for hours. the problem is

being blamed on the computer outage at the federal aviation administration. i saw his claim responsibility for suicide. explosion that killed at least 21 people in the afghan capital blast happen near the foreign ministry office and couple where chinese delegation was meeting with the taliban. your secretary of state antony blinkin. an u. s. defense sexy lloyd austin. have signed new agreements with a japanese counterparts expanding that military ties. they've also discussed the growing threats from china's ambitions in the region. rebels in ethiopia, northern to gray region have begun hunting in their heavy weapons to the federal army. it's part of a peace deal signed in south africa more than 2 months ago. to end a 2 year conflict. security forces in brazil's capital assessing up barricades and shutting down main avenues to traffic. that's as they prepare for more demonstrations from supporters. the former president variable scenary on sunday

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i hello, i'm adrian said again. this is counting the cost on al jazeera, your weekly look at the world of business and economics this week, one man's collapse, another man's correction. we look at what's in store for real estate. as fears of a global was session, grow. also this week. why millions of homeowners in the eurozone beyond the highly exposed to rape rises during any economic downturn. plus, we ask a property investor where he sees the market heading in 2023. and what homeowners can do to protect themselves, ah, is the global housing market heading for a painful downturn, things looking peachy for the sector at the end of 2021 house prices across countries of the o. e. c. d. or growing up at the fastest pace for 50 years. and all of this was

underpinned by low borrowing costs and savers with money to burn. now, just over a year later, things are not looking, so rosie high inflation has led to central banks, hiking their base rates. wages aren't keeping up with the rising cost of living. and the economic repercussions from the war in ukraine will be felt for some time to come. well, joining us now to discuss all of this is andrew bomb. andrew is a meritus professor of practice at the side business school university of ox, but he's also the chairman of new core capital management. good time with us, andrew talk us through the bigger picture here, the macro economic situation underpinning the housing market right now. as we it looks like about to enter a global recession. yeah, i think, i think the big news adrian about, about the housing market is, is most people would say, how is rising interest rates and the fact that they are now back to higher levels that we saw last in about 2007. so if you recall,

the global financial crisis liked to come to the interest rates wrong in the u. k. 5, of course is about one of the off by 2019 to tory, 2009. and then, and then they sort of come out again because koby, so we got you. so there's really low interest rate environment. and that's all reversed in the last 6 to 8 months. and that reversal is cause people to assume that we've got a housing problem. because of the rising cost of debt financing, that's clearly a big issue and that sort of creating a lot of concern in the, in the housing markets globally. right now, the big news. there are lots of other things that we also need to be aware of. the tendency of governments to regulate to protect tenants is one thing is not so environmental concerns and what we do about insulating else is that the concern and then just the general lack of homes, you know, the homelessness problem. the fact that in the u. k,

we think we're going to show you 3000000 homes or so. all of that is a problem as well. so when you put everything together, you know, housing is clearly an issue, which is the top of a lot of people with concerns. right now? are we heading for a global recession and is the era of cheap money? well, i'm sure the over well, i think the here are cheap money is well and truly i think that's the sort of an easy questions. one. so then the 2nd, while i learned a couple years ago that making forecast too dangerous. so we'll have our opinions, but yeah, the ear of money is probably over. i think we've been through a very, very unusual period from 2009, 2022. when we had abnormally low interest rates and, and we whole goal is on those very low interest rates, you know, we've, we've been able to borrow money incredibly low prices. and people like me with great hair. i've been expecting some of a reversal in interest rates for quite a long time, and we've actually been over forecasting not, you know, it's, it's taking

a lot longer to reverse the we expected that the arguments in favor of global recession. i think you all are certainly in recession right now. we're heading for a for a slow down next year. that's partly because of market increases in commodity prices, teaching bells. so we've got a problem. we've also got a budget that the squeezing money out of the economy rolls and putting it back into the economy, which is what you'd be hoping during the time. so we've got a double hit, and all countries are being affected by rising constant and huge inflation. and the reaction of both governments to huge in place is rise, interest rate increase rate, interest, ring. trump. the price is going to slow down or recession. you say that all countries are experiencing this. is there any particular markets around the world when it comes to housing? that will feel the pain more than others. well, the, you know, some markets are characterized by hot money than others. you know,

so there are some international markets where there are flows of capital, which can be, goes and can be, can be bad. you know, if you go to a market where people speculate, for example, then you get cost of only flying in and out. we've got speculation. you, you're more likely to get rapid changes in prices again. so that, that would include markets like new zealand, australia, the u. s the u. k. i think the u. s. is probably the best example of that where people will speculate on houses, you know, by 3 or 4 they can afford it against all of that. you've got fundamental on the supply of housing, in some markets, the u. k being an example, so the k is confusing because you've got a big on live housing and you've got the possible, hopefully flowing in and out another confusing for the causes the weakness of some currency. so if the pounded weak and overseas buyers will find house prices more attractive, the domestic buyers. so you got quite a few, quite

a few issues at all. buying together to create some sort of you about whether you're going to get price falls or not. and generally speaking, house prices don't fall very quickly already when you've already speculated market . the u. s. is probably the best example. let's talk about the u. s. in particular then, is we set for house price correction in, in the us, is that going to cause for the damage to, to, to the economy that, i mean, let's not forget that, that the, the financial crash 1213 years ago began in the u. s. you too bad home loans. yeah, i mean, yes, i mean, i think the, the house price correction is already started in the u. s. and house price, little bit, certainly below already years time that they are now in the us. and you can, you can read this 2 ways. you can say that that is going to lead to a slow down because people feel less wealthy. some people are forced to sell houses . so people better lose equity,

they lose capital. they're less likely to spend money. you then get some of the slow down, but there's another way of looking at the cheap house price. it's all good for a lot of people. you know, a lot of people would say the house prices would become too high. but the specters development in house prices needs to be squeezed out of the system. but higher interest rates all of box thing is if you can find out your house purchase when they settle down lower house prices. so i'm not completely sure that low have prices lead to recession. i think it can work both ways. right. but what about the federal reserve? how can policy makers bring down inflation without hurting homeowners in the u. s. and triggering more foreclosures. yeah. well, very difficult. i mean, the good news about the us is a lot of mortgage interest is fixed, so the majority of borrowers will fix their mortgage rates,

low interest rates and the vast majority. so anybody who finance that debt before 2021 will find out that probably low interest rates are going to be affected by the increasing rates in market where you've got variable rate mortgage financing, that you're going to see a bit of stress. even the u. k. is moving more towards fixed rate, fine. so there are, there's going to be a number of very unfortunate people who are false to orally asked historically high interest rates. but the vast majority of borrow is already fixed finance at lower rates. it's been really good to talk to andrew on counting the costs many thanks. indeed for being with us. andrew ball. thank you. now let's take a look at how people from the homes around the world. not all of them share the same. expose is a risk during any global economic downturn in the u. s. for example, mortgage rates tend to be fixed for 2 or 3 decades, so the pain from rate wise's can often be delayed for onus. in contrast, in australia, around 80 percent of mortgages, a tied to variable rates,

homeowners that are the most exposed to higher rates in the world. in sweden, it seeing a reverse in its housing boom because of energy costs and higher rates their money take on interest, only loans that don't require paying off. the principal loan, finland's mortgage market, however, is almost entirely priced at floating rates. but those who live in the south of europe tend to live in mortgage free households, where inheritance or family support is a common route ownership. a germans are more likely to rent than own the homes. so rate rises will have less of a direct impact on them. with a more on the nordic perspective on home buying, we joined by i oust who's a professor in financial economics at n t n u business school. and he's in oslo. norway, good to have with us talk us through why people living in scandinavia often go for these interest. only mortgage is rather than fixed or variable. good

reason why that is partially cultural. i partly historical and partly because the difference in regulation. so there are, i don't, course when it comes to cultural, we are having a great deal of security nets in the developers states in order to concrete. so you are supported in, in a lot of ways. so it's, it's not so risky and re tell them that it can insurance. so we spend additional for them to have floating interest rates or, and not the interest rates and the money regulations, the positive for the households. so they don't get extra mortgage. for example, by choosing pick interest rates, but if people have interest only mortgages the the never actually going to pay off the, the full loan on the property. therefore,

presuming if they want to end up owning the property in which they live, they have to have another vehicle which is going to pay off the principal some to have. yeah. interest more only for just a time, limited time period, for example, 5 years and then they start to pay and ah, so it's, it's not interest only for the whole tub. no. so it's keep clean a limited period. typically when you are young households who is just entering the market and then offer while when you play there, there rages are increasing, then there's talking to pay down payment on the lot. ok. sweeten of the moment is saying a reverse. it's housing boom. explain for us why, why that happening to us. we are, we have a future 1st especially under karone up where the interest rates become negative actually. and then you got

a huge boom. and then now we got a bust as so it's, it's pretty hard actually. and it's party of course, cost by higher interest rates and partly by inflation. so we didn't have 10 percent, the placement that consumers quite hard. and so they have less money to spend them housing. what about in finland mortgages? there are almost entirely a floating interest rate of a variable rate. so we could assume the homeowner as their face more risk from rising interest rates than perhaps elsewhere or the euro zone. yeah. so they have didn't have this cycle. so the price is actually quite low compared to sweeten annoying. so with the garland low level who the interest rate,

the got sion to them at hard because they're not that much in depth. so yes, they have floating in the us, we have in a noise as well, but because the dwelling is cheaper, it doesn't harm them as much because we didn't have this boom period at the same level as being away. and we what, what is that, that the situation in norway, at the moment, the property market, what, what's happening there in norway to know we have is starting to see a decline in house prices. not that it's the rear, i think when so the polish has been more limited, but we're starting to see something and it's very exciting or interesting to see what's happening down there in peppery keep me very strong markets noise. if it will see a pole and goes to months, it will probably continue. and one thing we haven't talked about is the rental

market across that, that the scandinavian countries, how many people are renting? so it's very different between the concrete. so in ways we, it's quite a limited number of household that the 20, so 20 percent in all way in a little bit more in them, in sweden and merck. we have regulate grantsville markets and a high chair of the household who is 20. 1 of the things that we hear about the you can particular is that there are entre bananas who look at buying property as a, a sound investment. there's the buy to let market. does that exist in scandinavia? yes. so it's actually the rent for by but it's, it's just starting up to we will see if that will become popular. but it has been used like a foothold for young households to enter the market, but it has just started. so we will see,

maybe are they increase increase strengths will push that forward and increase the size of the market professor. it's been really good to talk to you on counting across many thanks. indeed for being with us there in also. thank you. the u. k, the economy shrank for a 4th consecutive month in november, pointing to a deepening recession. that's expected to last more than a year. mortgage repossession is that month, also saw by more than 90 percent on the year before. that's the cost of living crisis bytes. so where does all of this leave people who have mortgages? well, someone who's written extensively on this subject as rob dick's, he's a property investor, ortho, and co founder of property, how he joins us now from london. rob, good to have you with us. what are you seeing in the property market? specifically? there are the u. k. right now, well, it's been cooling significantly, not just the many budget, but that did kick it up again, but we were talking about this back in june,

july kind of time. the move market cooling right off. but interestingly, not as it's not as bad as sentiment would have. you think that if you look at the actual beta, you look at the number of property having price cuts. if you look at i taught by interest and things like that, it's full and bright down. but if any come back to where it was in a new year kind of before the cove, it, it's all set in the market into overdrive not going to get worse from here. it could day. but i feel like at the moment the, the sentiment is worse than the reality on the ground. and the flip side of that is the rental market at the moment is super strong. yeah, the bank of things though is saying that it might have to raise rates again at least a couple more times. but how long is this this on cars? you know, you say that things aren't as bad as, as perhaps the sentiment would lead us to believe. but how long do you think this pain is going to go on? i think the bank of england is almost, well, he's going to raise rates from where they are now off to the last rate hike up to where they are now. they did signal quite strongly that they wouldn't be raising

right. as far as market price. then i think that's interesting because they still went to a period of talking very tough about rates. and now it went out there with nervous about what is going to do to the market housing in particular. and they're trying to talk about bound again. it all comes down to the path to inflation, which is really hard to predict. my personal view is that inflation will start to come under control in the next 6 months or so. and that's going to make the bank of england job significantly easier, and they're not going to want to raise right? any further, may have to, of course, is going to be upwards from here. so i don't think anyone's going to look back at data trends to 3 and go what a great year this was by. do you think it's going to feel better that it does right now? none the less, i mean, even if the rates don't go up as much as perhaps we're expecting, even a small rate rise can have a significant impact upon homeowners and the amount, but they have to pay to, to mortgage companies. for anyone who isn't on a fixed rate right now, what can homeowners do to protect themselves?

i think we've seen like the last month that the mortgage market started to significantly improve. we've seen rates coming down over the last month and we've seen more product choice. lots of lenders pulled that products off the market backdrop, september october. it's very much was going on and now they're starting to come back again. so i think if you've got the option of doing nothing and just waiting, that's probably a pretty good move because i do think things will improve from where they are. now . if you're in a position where you have to do something, because you've got a right that's come to them that come to a really nasty variable, right? that it's really important to work with a good mortgage broker. you can show you what their options are, cuz there are things you can do such as going onto a variable rate with no penalty for sort switching to a fixed rate, which means you can get a rate that fast and you've got now and then come on to fix when fixed is come to a court price that you're happy with. so there are all things you can do. but i think if you're a homeowner who's on a right you say you've got to fix that, got

a few years to run that you fix that say like 2 percent or something like that, which is pretty realistic about here go. you need to be prepared that when that rate comes to an end, you're not going to be going back on to 2 percent right. target is going to be a long time till we see that again. so it's a good time to be preparing for what rates are likely to be in the future. so if you are a vision to have time to do that, that's great, but it's still going to come at some point. rob, where does all of this fit into the 18 year cycle? perhaps you'd like to explain what exactly. but the 18 year cycle is? yeah, the cycle, it's a theory. it's gonna come up with my uncle, fred harrison. he went back and lifted basic, going back for about 100 years and found the real estate center or land value more accurately tends to move in the patted, where on average, used or got a few boom and bust. so prices all right steadily for the most part, they have a couple of years. ready shop lee, and then they crash again. the 18 year part is an average. and so it's not something you can set your calendar by and decide who,

when you should be buying and selling proxy. but it is an indication that's been useful. so we used to use or correctly predict that price. it wouldn't fall in the wake of rec, and covalent bond consensus at the time. so the cycle, if you're following the 18 years is currently will bend to end in 2026. so according to that, there's another few years to go. so as an investor, that's interesting, but there are things you can do, allows you to actually capitalize from the strong growth of the end of the cycle where everyone thinks of the cycles come to end already as a highlighted, it's not something i worry about too much because you, you buy a home because you want to live. so it's not good out there to try to time the market in that respect. the real key is to be able to make sure you can afford your retirement. because what it's like, which is us, is that yes, price crashed with a long term trend is always up to the real key is to make sure that you're not supposed to sell one of those times when prices have fallen. because if you do,

just keep on holding that eventually they'll come back to where it was and beyond what you've written about, how pro, interest, only mortgages. you are something we were talking about a few minutes ago, whether incredibly popular in sweden. of course, if you want to end up owning the home at the end of it, you've gotta have another vehicle to pay off of the principal, given the global recession fears and everything. this happening in the u. k. right, right now, as your stance on the interest only mortgage is changed. if not, why not? i think it's very different for homeowners and investors, because if you're home or not, most people will just want to have that home paid off in most cases. as soon as you can, so in that respect, just having a fixed payment where you know, if you make that payment for the right number, give you then the property free and clear. that's what most people get about to be able to do. it's quite difficult to get a interest or any movies on a residential property anyway for investors. i think it's different for investors.

i think going to the reason i say interest only is better is that it gives you flexibility is not that you won't want to pay off chunks of your mortgage. you can buy off of your mortgage wherever you want to, but you're not locked into that repayment. schedule, so it's only he paying the interest, you have higher cash flow because you're not paying the principal off. and you can decide when you want to pay it or you can decide which of your property you want to target to make payments day. so it's really about flexibility, so nothing about the current situation changes my view on that when it comes to investors. but that's completely different for there will be some owner occupied as he would feel the same way. but the majority of cases, they just go to want to pay off the banks. a lot sense you mentioned how boy and the rental market is at the moment. i mean, there are 2 ways of looking at this. people who rent are being faced with, with increases in the rent right now, but investors finding that it's pretty good. would you invest in a property right now? if so, why and where. yeah,

i'm investing right now if they don't go to going through at the moment, both in the middle and in the u. k. and the reason for that is i'm investing for the next 20 years plus, so i'm not bothered about what happens in the next couple of years if prices fall doesn't really matter. because as we talked about with the proxy cycle, the long term trend is always upwards. so that doesn't alternate. and as an investor breads are particularly strong right now, which is helpful, but brent's tend to be very, very steady. so even when house prices fall, we saw in 2000 and i read, stay steady, and sometimes even rise a bit good. there are more people wanting to rent. so you've got your rental income, which is very steady, very secure. but that will kind of persist for many, many years. but then natural prices will move all over the place. sometimes they'll be up. sometimes they'll be down. if you're investing for low enough, then you can not be too concerned about what happens bucks a month yet. yet roberts felt really good to talk to you on counting the cost. many

thanks indeed for being with us. thank you. and that's all show for this week. if you'd like to comment on anything that you've seen, you can tweak me. i'm at a finnegan on twitter. please use the hash tag a j c t c. when you do or you can drop us a line, counting the cost at al jazeera dot net is our email address. as always, there's plenty more for you online of al jazeera dot com slash c t c. that takes you straight to a page there. you'll find individual reports, links out into episodes to catch up on that that is it for this edition of counting the cost. i'm adrian finnegan from the whole team here in doha. thanks for being with us. the news on al jazeera is next ah

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