Depression in the UK. Is it really that bad?

[Satch]

Also, the media has made the 'credit crunch' a lot worse than it really is. I feel that they actually contributed by all the publicity in the press itself - doom mongering I think its called!

Well call this what you will but facts speak for themselves and right now a business either has or generates sufficient cash to survive by itself or it does not. Nobody would bail Woolworths because it was a busted flush in terms of business model. Same goes for way too many others who relied on the assumption that retail sales would continue unabted and leveraged up to the hilt and beyond. After a boom, there is always a bust

High street braced for Christmas sales carnage

UP to 15 national retail chains are predicted to go bust before the middle of January, forcing thousands more shopworkers onto the dole.

The prediction came from insolvency expert Begbies Traynor as well-known retail chains clamour to sell enough goods to meet their quarterly rent payments on Christmas Day. Nick Hood, partner at Begbies Traynor, said: “I would not be surprised if between 10 and 15 national and regional chains collapsed before the middle of January.”

Hood refused to name specific store groups, but this weekend it emerged that The Officers Club, a 150-strong national menswear chain, had been put up for distressed sale through KPMG, while the specialist tea retailer, Whittards, and music store Zavvi remained on the critical list.

According to the accountancy firm Price Waterhouse Coopers, if only 10% of national retailers get into financial difficulty in the next 12 months, that would bring about 4,000 empty shop units onto the market.

http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article5375478.ece

 

[Piff]

It seems to be a national craze "the housing ladder" why does it have to be a ladder?
The press blow this out of all proportion. They talk about prices down by 15% already and probably another 15% next year. That says to anyone needing to buy a house that you should wait until next year which in turn further depresses the supply & demand balance.
I have a few shares in a financial institution from when they de-mutualised. I checked their value last week and they were down 50% on their value from a year ago. Down to the same value they had in 2000. The press don't keep banging on about share prices the same way that house prices are publicised.
That said, yes I think 2009 will be worse. It's time to tighten our belts and to think that the govt is promoting borrowing at this time seems a little foolish. I think these things go in cycles and you have to accept the correction after enjoying the boom.

 

[Howard]

Thought the Woolworths sale fell through because of the complexity of their leases .....

 

[neilrr]

I thought it was the £300,000,000 or so debt they carried.

 

[fuzzer]

i thought it was becuase of the pick and mix running out of white mice!

 

[Dryce]

The press don't keep banging on about share prices the same way that house prices are publicised.

The media are always looking for an angle or a hook.

This means that they can shout "House prices to fall X%" without even referencing where that measurement starts.

During the mid-nineties recession I can distinctly remember Ceefax reporting two headlines on the same page - one saying houseprices rising and the other saying they were falling. They don't really care or cross check (the headlines referred to reports from two different banks/building societies).

Gordon Brown and his spin doctors understood this well when it came to announcing spending on services.

 

[Howard]

I know it's from Wales Online , but it was the only link to it i could find , it was reported IIRC on the BBC , but i can't find the link ...

http://www.walesonline.co.uk/busine...woolies-to-close-by-january-4-91466-22497269/

 

[Piff]

The media are always looking for an angle or a hook.

This means that they can shout "House prices to fall X%" without even referencing where that measurement starts.

During the mid-nineties recession I can distinctly remember Ceefax reporting two headlines on the same page - one saying houseprices rising and the other saying they were falling. They don't really care or cross check (the headlines referred to reports from two different banks/buildig societies).

Agree totally - we have different building societies reporting days away from each other quoting different statistics.
I think, if you want to quote average prices, then you have to pick an average house in an average street in an average town. You can then measure the rise & fall of the price of this average house (if you really want to!).

 

[tim.100]

Flats are dead in the water unless very special indeed. There has been massive oversupply and contrary to lifestle marketing people don't really want to live in the inner city flat environment.

Not marketing people. Actually the government policy authored by Lord Rogers* in his 'Urban Rennaissance' report in about 2000; and pursued by Blair & Brown thereafter. Permitted urban densities have shot up in the planning system, so you get flats.


*A recent Lord, and a major Labour donor

 

[Ade B]

Not marketing people. Actually the government policy authored by Lord Rogers* in his 'Urban Rennaissance' report in about 2000; and pursued by Blair & Brown thereafter. Permitted urban densities have shot up in the planning system, so you get flats.


*A recent Lord, and a major Labour donor

Funnily enough Lord Rogers of Riverside lives in a rather fancy converted Georgian Terrace (rumoured to take up about half of the entire street).

Nothing wrong with living in flats in high densities if they are well designed (including proper acoustic separation), most European cities are full of them, which is the model RR seems to be fond of - you know car free urban piazzas where slim, tanned liberal thinking types sit around in linen shirts sipping espressos and debating the finer points of life...

Most brits seem to want a detached box with a moat and drawbridge round it. Civic life is a trip is a trip to Bluewater twice a year.

As for the recession, I spotted plenty of retail action today in my jaunts to Croydon and the West End... No doubt things are down on the last few years but when you've maxed out six credit cards already, there comes a day when you've actually got to pay for something..

As for construction, in my tiny corner of the world, things seem to be on the up for the foreseeable future (ie. the next 3 months).. but I'm not involved in speculative housing or office space. I guess we'll soon find out.


Ade

 

[Dieselman]

Permitted urban densities have shot up in the planning system, so you get flats.

Because they were allowed to build more properties per hectare doesn't mean they had to.

 

[3 phase]

According to the media Spain and in particular the costas is "hell on earth" "the eldorado bubble has burst" etc etc etc blah blah, yes it's as bad as in all the rest of the world but the doom and gloom merchants can talk the world into a recession with one click of the mouse. And remember for every poor sod losing money, job, car or house, some other blighter is coining it in

 

[crockers]

If your house was £272k last year I bet £170k is more like it now if you actually needed to sell it, not £230k.

I can assure you that I could sell my current house for around £230k if need be as obviously I know what the area prices are like. This might not be the case where others live of course.

.

Not sure where in the Swindon area you live .... I daresay your house is valued at the price you say ---- I doubt you would get it quickly. The housing market, especially in(used) new builds, is dead and you would be competing with the masses of unsold new houses from builders offering massive incentives to move the masses of stock especially in West Swindon / Abbey Meads. Add on top of that the main employer - Honda - shutting down for 2 months and are now offering anyone who will take it £15,000 to just go...the concern in this area is high.

You are fortunate to be in a "safe" occupation (redundancy wise) but not many others are - especially those who would need to buy your house.

I truly think it is now impossible to value a house fairly - as many are now worthless - as without a buyer there is no value attached.

Some on here live in fortunate areas - and see movement in housing stock - that is good and I hope it spreads.

But I do agree with your sentiments that too many have over stretched themselves and now the chickens have come home to roost.

I can still vividly remember sitting at an investment dinner I was hosting and an IFA telling me that property is a far less risky investment than government bonds. I said he was wrong and explained why, he just said that I knew nothing and he was putting all his clients into property and advising them to buy "buy for lets" as well...

I realised then that too many people don't invest soundly, spreading risk, and just jump on the next bubble..........usually too late.

I fully believe that one should buy a property to live in and if it increases with value (in line with inflation ) you have done well....

Now I wonder with interest rates approaching zero how many will think "great i haven't got to worry about my mortgage payments" and go out to buy all the consumer goods the government want us to buy or will think "Great here is the golden opportunity to pay down my debts" and reduce their mortgage amounts.

The former is short term and if the economy picks up so will interest rates to stop inflation.........and perhaps the cycle starts again - the latter is insurance against the former.

 

[peterg1965]

Mercedes UK are in seriously trouble, they are £300m in the red purely on the guaranteed future values they have coming back this year (in other words they are buying cars back in for £300m more than they are worth, ouch!) and they have another £300m worth of un-registered cars sat in fields that need paying for too.

I read this yesterday and it has been bugging me ever since. Having looked on the Merc UK website at the current new car offers, if this statement is true then why are Merc Finance still offering an ML320CDI (£43350 OTR) with a Guaranteed value of £29725 after two years?
69% of its list price and also with subsidised finance at 6.9% APR?

I suspect the answer is that the cars are actually worth considerable less to start with, as they are built in the US and cost about half as much over there. MB UK cannot be losing out otherwise they couldn't keep doing this for their UK customers. It is one way to shift cars, and I could understand if they take a small hit but not £100's of millions.

 

[Dryce]

I suspect the answer is that the cars are actually worth considerable less to start with

That may be true.

It's a rock and hard place problem. If they discount the new price they destroy the residuals anyway. That undermines their value. Hence the myth of these leasing deals - it's all about discounting but 'without discounting'.

And it's pretty obvious that they were doing this before the crunch it's just now that the used market has collapsed their residual figure stands out more.

 

[crockers]

Wonder how much longer manufacturers in EU can carry the loss of profit of selling into the UK...hard to put up prices in a recession without destroying a diminishing market..

Three choices - 1. leave things as they are and subsidise the UK market. 2. Increase prices to reflect the strengthening € or 3 Cut back on specifications

 

[Mudster]

Picked up Mrs M's new A class on Saturday Previous chats with the dealer said they were down on sales but were getting enough to ride it out....

Different story this weekend, said they'd gone mad, (there were at least 5 people in their picking up brand new cars that afternoon) plus more lined up ready to go.

I have to say the new ML looked nice, now everything I look at is geared to a partner who has MS, the seat height looked very easy to get in and out of.

The thing is I'm a Range Rover guy and would always prefer one of those over any other 4x4.

 

[Dieselman]

Now I wonder with interest rates approaching zero how many will think "great i haven't got to worry about my mortgage payments" and go out to buy all the consumer goods the government want us to buy or will think "Great here is the golden opportunity to pay down my debts" and reduce their mortgage amounts.

As a purely hypothetical question;
If interest rates on mortgages are very cheap is it worth paying them off or better to save the extra one is saving ready for the rainy day if/when rates rise again?

 

[Rovinghawk]

Surely paying off debt is the same as saving? So reduce the mortgage.

RH

 

[wemorgan]

My view is that some banks through ISA and SIPP are offering 6% savings rates. So if your mortgage rate is less than 6% then it is better to save than to pay off debt.