We’ve had a busy week putting the programme together for 2008 and also re-structuring some of the activities we do in order to focus on the growth of the development company.  In that light, we have an exciting opportunity to purchase more land in my favoured area and I will be flying to Cyprus at the weekend to take a view (literally!)  Prior to that, I am attending the annual Armistice lecture by Sir Max Hastings in Whitehall on Thursday and then attending the Remembrance Service at City Hall, London on Friday morning.

The markets have again been volatile and the Fed reduced its target funds rate to 4.5% as the credit crunch takes a grip and foreclosures (repossessions) go through the roof.  In the UK, investors and homeowners are waiting with bated breath for the ripple effect from the other side of the Atlantic.  It is my view that unless we see a recession in the UK and much higher interest rates there will not be a “crash” in property prices, although expect falls.

Jet-to-Let Magazine is going from strength to strength and you are just as likely to read it in your doctor’s surgery or at the dentist as receiving it on your doorstep.  The magazine is also now circulated across the UK Armed Forces in Officers’ Messes and many of the top golf clubhouses in Britain.  The next issue due to be delivered to you 18th January 2008 is to be expanded by 36% and will feature 60 pages of the very latest property investment news and features as well as the regular columns.

Next year Jet to Let Magazine will be distributed at property investor exhibitions in London, Dublin, Birmingham and Manchester.

Advertisements – if you have a product or service which you think will appeal to our readership of property investors please contact Clare at clare@jet-to-let-magazine.com for rates.

Latest Property Investment News

Eastern Europe to reap its own subprime crisis

Inflation in Bulgaria (12pc), Latvia (11.4pc), Kazakhstan (8.6pc), Russia (9pc), Estonia (7.2pc), Lithuania (7.1pc), and Romania (6pc) has reached levels that will force the authorities to slam on the brakes, endangering banks that have allowed credit growth to mushroom out of control.

Those countries that rely most on foreign debt to fund their housing booms – often financing mortgages in euros, Swiss francs, or even Japanese yen – are already facing a buyers' strike.

Money market rates have rocketed and the cost of default insurance has yet to settle back after spiking in August.

"This could easily become Europe's subprime crisis," said Lars Christensen, Danske Bank's chief economist for Eastern Europe.

"The macro picture is deteriorating dramatically. On almost all indicators, the extremes are worse than during the East Asia crisis in 1997-1998. We have a story of over-leveraging and asset bubbles with massive excesses that are clearly unsustainable. Look at Latvia, where the current deficit has reached 30pc of GDP, and it is not much better in Bulgaria and Romania," he said.

"They could do this when easy money was on tap but that's not available any more after the global credit crunch. The situation is already turning quite serious. The money markets are basically not functioning in the Baltics," he said.

The IMF warned in a report last week that capital inflows into the region had reached levels that were "unprecedented for emerging market countries in recent history".

The fund said those economies with yawning current account deficits were most at risk.

As a whole, the rising economies of Asia, the Middle East, and Latin America have been able to brush off the summer squeeze. Indeed, the MSCI index of emerging market stocks has risen by over 30pc since early August, with help from fevered buying on the Shanghai bourse.

But investors have been less kind to countries where banks have funded their booms by drinking deep from the global debt markets – in the manner of Northern Rock.

For the EU newcomers in the Baltics and the Balkans, the inflationary villain is the euro, say bankers. The system of euro exchange pegs -– de rigeur for any state preparing to join EMU– has caused their Tiger economies to overheat wildly.

They have in effect imported a loose monetary policy geared for the sluggish Old Guard, much as Middle Eastern and Asian tigers are importing America's loose policies through their dollar pegs.

Lorenzo Bini-Smaghi, a board member of the European Central Bank, said last week that the euro pegs "might lead to boom and bust cycles, with potentially very severe adjustment costs." His comments sent tremors through Eastern Europe.

"This smells like the ERM crisis in 1992," said one banker.

Latvia is in the eye of the storm. Riga house prices – now more expensive than Berlin – have begun to slide. According to international estate agent Knight Frank they rose 61pc in the year to March 2007. The Riga group Latio said prices fell 1pc in May, 3.5pc in June, and have almost certainly dived over the summer.

Compared to the $2,000bn market for US subprime and "Alt-A" housing debt, the sums lent to finance East Europe's exuberant embrace of capitalism are in themselves not enough to cause a global financial crisis. But the sums are not small either, and just like the subprime debacle, we don't know who holds the hot potatoes.

Source: Telegraph