Trillions of dollars and euros held on behalf of the citizens of countries across Asia (and elsewhere) are earning meagre returns and subject to increasing sovereign risk. This cost of selfinsurance is therefore becoming increasingly apparent, a trend that will surely continue as, inevitably, Asian productivity levels continue to increase relative to the Western countries and their real exchange rates rise.
What if recent buyers, heavily in debt, find that rents have fallen, making outgoings more than incomings? What if they decide to exit property and then can’t sell at prices paid a few months earlier? How could supply exceed demand? We think that net immigration is likely to ease a little over the next two years. Partly that will reflect Government policy.