The UK economy is already in recession, according to Resolution Asset Management, quoting the National Institute of Economic and Social Research’s monthly estimate of quarterly GDP.

The report predicted the UK economy contracted by 0.2 per cent over the three months to the end of August, which signals growth contracted in the third quarter as a whole, Resolution said.

Stuart Thomson, an economist at Resolution, said: “Economic conditions are set to worsen in the fourth quarter, according to leading indicators of mortgage applications, as well as the CBI’s industrial trends and distributive trades surveys.

“Immediate interest rate cuts are required, and given the collapse of the monetary transmission mechanism, these cuts have to be deep.”

Thomson said he believed UK base rates would fall to 3.5 per cent or less by the end of 2009.

Further, he said the financial sector required long-term funding that could only be provided by individual savers or the government.

Respecting the US economy, Thomson said: “With unemployment and risk aversion rising, as well as house prices falling, the relief rally in consumer confidence will translate into a significant improvement in retail sales in the near-term.

“The financial crisis began in the US and will only be ended by the US authorities, but the contagion to the rest of the developed world is clearly evident.”

However, Thomson said he expected the US dollar to remain the strongest global currency over the medium term, but that failure to provide adequate political leadership could cause a correction over the coming months. (Source: FT, 24/09/2008)

Renewed anxiety about the health of the US economy and large companies such as Citigroup and General Motors has led to fears in the credit markets that the worst of the crunch might not be over.

The high-grade derivatives index has widened to 138 basis points after being as low as 90bp in mid-May. The Merrill Lynch US High-Yield Master II index, the benchmark for the high-yield cash market, is showing a spread of more than 700bp over US Treasuries. In March, the high-grade derivatives index reached 193bp, according to Markit, while spreads on cash junk bonds topped 850bp.

“In the last few weeks, hopes that the financial markets had turned the corner have faded,” says Martin Fridson, chief executive of Fridson Investment Advisors, an investment management firm specialising in speculative grade debt.

The mood in the credit markets had improved considerably in the months after the near-collapse of Bear Stearns in March. Wall Street was able to unload some leveraged buy-out debt left over from the boom and write new business. At the same time, the blockbuster bankruptcy or default that investors had feared failed to materialise. However, poor economic data, concerns of further writedowns at the big banks and problems at US carmakers have rattled investors.

“A number of industries are in full-blown recessions: the housing industry, the airline industry, the auto industry and some would say the retail industry and the banking industry,” says Derrick Wulf, a portfolio manager at Dwight Asset Management.

US carmakers, which have billions of dollars of junk-rated debt, have stumbled as surging petrol prices and low demand for sports-utility vehicles hurt sales and cash flow. Long-term bonds of Ford and GM have sold off in the past week and now trade about 55-65 cents on the dollar, which are considered distressed levels. Ford is the largest member of the Merrill index. GM is in the top 10.

The spectre of stagflation does not help. Higher costs, but flat or lower sales and profits hurt a company’s ability to service and repay bonds, especially those companies that are the most hamstrung by debt.

For the rest of the year “there will be spread volatility, a few more negative headlines, a few more investment-grade issuers downgraded to junk and an increase in the default rate”, Mr Wulf says.

Through May, the default rate has doubled, but it is still historically low at 2 per cent. It is expected to surge to 5 per cent by the end of this year and to 6.3 per cent a year from now, according to Moody’s Investor Service.

(FT, 27th June 2008)

The hundreds of thousands of Britons who have moved to Spain in search of a better life have been hit by falling property prices, sometimes with devastating consequences.

When Maxine Crooknorth bought her home on Spain’s south coast two years ago it seemed like the fresh start that she and her young son needed.

Following the death of her partner, she could not afford to get on the property ladder in Britain. And like hundreds of thousands of ex-pats she longed for a new life in the sun.

“I thought it was absolutely brilliant when I came here,” she says sitting on the lush garden terrace of her flat overlooking a golf course and a view down to the sea.

But the dream has turned very sour.

Spanish slowdown

As the Spanish economy has slowed down Maxine has found it impossible to find work to cover her mortgage.

She would like to sell up and go back to Britain. But she bought at the height of the decade-long property boom which made the Spain one of the powerhouse economies of Europe attracting investment and immigrants.

That boom has come to an abrupt halt. As a result Maxine cannot sell her home even at 20% less than she paid.

“There just aren’t the people out there who are buying at the moment,” she says. “Some are but they want a real bargain. Which means that I’m losing an awful lot of money.”

“If I cant sell the place I have looked at renting the property out. But again that’s not really going to cover the mortgage. The other option is just to have to walk away and just to let the bank have it, which means we lose absolutely everything.”

Widespread problem

Maxine is not alone in her predicament. She says that her son has had to say goodbye to seven of his British classmates because their families have found it too tough to stay in Spain. 

And Maxine’s mother, Sarah Smart, is facing losing the home she thought would provide for her retirement.

“We bought our house four years ago when everything was booming and there was plenty of work,” says Sarah. “We bought it as a pension really and things have dried up and we are waiting for it to be repossessed.

“Its been on the market for two years. It started out at 495,000 euros and its now down to 360,000 and still we can’t sell it.”

The pain in Spain

Britons on the Costa del Sol are suffering a measure of the pain which the end of the housing boom is causing across the wider Spanish economy.

Estate agents report that house prices have fallen 30% in many areas; economic growth forecasts have been revised downwards.

Overheating

Mr Solbes says the underlying cause of the slowdown is that the economy became too dependent on a construction sector that got overheated.  have been built, or are still under construction, for which there are not enough buyers.

“We were insisting that the construction of 800,000 a year had no sense that we had to we had to come back to a more normal production of houses, around 500,000 houses and this is what is happening today.”

If what is happening now is a correction then how long will it take for the economy to come out the other side. Mr Solbes hopes the worst of the pain to be over by the end of 2009.

But Spain’s leading housing analysts idealista.com say that in the long run the answer must be diversification so the economy doesn’t have to rely on house building to provide growth.

“In Spain the dream is over,” says the company’s co-founder Fernando Encinar.

“Spain is like Ireland and the UK. We have to face a new situation: what is the source of the economy without the real estate market?”

(BBC, 14/05/2008)

There is a one in three chance of the UK going into a recession over the next two years, according to investment bank Lehman Brothers.  

It says the global financial turmoil is increasing mortgage rates and predicts this will reduce consumer spending.  Lehman Brothers says the Bank of England will be forced to cut rates to 4% or lower to boost the economy.  

The report comes as the latest revised official figures cut the annual rate of UK growth at the end of 2007 to 2.8%.  The annual growth rate in the October to December quarter was trimmed from an earlier estimate of 2.9%, and was the lowest rate since the second quarter of 2006.  

The Office for National Statistics figures showed growth during the fourth quarter remained unrevised at 0.6%. 

 A recession is defined as two consecutive three-month periods where the economy contracts.  

“It has become clear that the banking system - and hence the credit creation process - is under considerable strain,” Lehman Brothers said.  The bank says the credit crisis is now having an impact beyond the financial world as households are finding it more difficult to borrow money to buy a house or remortgage their existing property.  

The investment bank says this will have an impact on the housing market and predicts house prices will fall about 8% by the end of next year.  

“Given the importance of housing wealth for consumer spending, this points to an economic slowdown that could last some time.”  Economist Howard Archer from Global Insight said he believed the UK economy would slow, but not enter a recession, despite consumers tightening their belts in the face of increased mortgage rates, higher food and utility bills.  

“We believe the UK is set for an extended period of markedly below-trend economic growth, although we remain hopeful that it will avoid recession,” Mr Archer said.

Source: BBC 28/03/2008

The threat of a sustained downturn in the housing market grew yesterday after a leading investment bank forecast that property prices would fall for the next two years.

Goldman Sachs said it expected house prices to fall by 5 per cent this year and a further 2 per cent in 2009. The bank had originally predicted a decline of 3 per cent in 2008 and no further change the year after, but became more pessimistic after economic warning signs.

The predictions came as another set of bleak figures showed that first-time buyers were spending the highest proportion of their income on mortgage interest repayments since the recession of the early 1990s.

Leading economists gave warning of a “very real danger” of a sharp housing market correction that could lead to recession, after findings from the Council of Mortgage Lenders (CML) showed that interest on mortgage repayments is eating up more than a fifth of the average disposable income of a new homeowner.

The proportion of income that a first-time buyer spends on mortgage interest was 20.7 per cent in December 2007, compared with 17.9 per cent a year ago. The figure has not reached this level since 1991, before the housing market crashed in 1992.

The CML said that the size of the average home loan also rose, from 3.34 times a typical first-time buyer’s income in December 2006 to 3.38 times at the end of last year.

Experts blamed tighter mortgage lending in the wake of the credit crunch and interest rate increases between August 2006 and August 2007 for the squeeze, dismissing claims that further cuts to the base rate will solve the problem.

Banks and building societies have been cutting back on the amount they are willing to lend, as well as increasing mortgage rates, after last year’s US sub-prime mortgage crisis left them facing chronic funding shortages.

Howard Archer, chief economist at Global Insight, the economic analyst, said: “The data highlights the downward pressures on housing market activity and prices stemming from stretched affordability and tighter lending practices. While the Bank of England’s trimming of interest rates in December and last week will help matters, the overall downward impact on mortgage rates has been limited by a lack of funds for lenders, as well as lenders wanting higher margins due to increased risks.

“There is clearly a very real danger that a sharp housing market correction could occur. Conversely, a sharp housing market correction would increase the risk of recession.”

Goldman blamed tighter credit conditions, falling house price expectations and falling mortgage approvals for its downbeat outlook.

The bank also revised downwards its forecast for the number of property sales it expects in 2008, after weak trading updates from housebuilders showed that forward orders were down by more than 10 per cent. It expects property sales this year to fall by 16 per cent, after a previous forecast of a 10 per cent decline.

The CML yesterday called for the Chancellor to raise the Stamp Duty threshold, after it found that only 40 per cent of first-time buyer properties fell under the current limit of £125,000.

The number of surveyors reporting falls in house prices grew for the sixth consecutive month for the first time since the early 1990s housing crash, new figures show.

A total of 54.7 per cent more chartered surveyors saw lower house prices in January than those who reported rises, the Royal Institution of Chartered Surveyors said.

The figure was up from 49.1 per cent in December and has soared since the 3.1 per cent balance last August, providing more evidence that Britain is experiencing a housing market slow-down.

Last month’s balance is the highest since the 60.1 per cent recorded in November 1992, when the measure grew for five months running.

Government figures released yesterday showed a rise in average house price in December, from £218,662 in November to £219,591.

Squatter’s rights ruling hits home

Mortgage defaulters could face a tougher stance from banks after judges wiped out the debt of a man who had not paid anything towards his arrears for more than 15 years.

Banks have given warning that the Appeal Court ruling in Djabar Babai’s case may force them to take early action against debtors.

The last mortgage payment made by Mr Babai was £40 in January 1993. Because of the bank’s delay in taking action, however, the Appeal Court ruled that he had acquired squatter’s rights over his £200,000 home in Stockport, above, and that NatWest’s security was worthless.

Justin Fenwick, QC, for the bank, said that lending institutions could now be forced to issue possession proceedings “where they would not otherwise have done so”.

Lord Justice Mummery said that it was “an alarming, but unlikely prospect” and said that the practical implications of the decision “are in danger of being exaggerated”.

Mr Babai was made bankrupt in March 1993. The bank took no legal action to enforce its rights.

Lord Justice Mummery said that there should be no difficulty in lenders taking action “within the ample 12-year limitation period”.

(The Times 13/02/2008)

Suppose the gloomsters are right. Suppose house prices do fall significantly. Suppose there really does have to be a significant adjustment to bring residential property values back towards their normal relationship with wages. How do we as a nation best get there?

Take a 20 per cent fall in average home prices from the present £197,000 to £158,000 over three years. That might sound cataclysmic, but it is not a particularly extreme outcome. Such a fall would bring prices back to levels of two years ago and would still leave the ratio between prices and earnings stretched by historic standards. But what would be the best path for such a fall? What would be optimal - or least damaging, anyway - for the wider economy? Is it better that prices should slide gently but continuously for three years? Or would a quicker and deeper plunge in year one, followed by two years of stability or even gently rising prices from a new lower base, be better?

It is a question that hasn’t really been addressed. It is becoming more pressing, though, as the market turns. Figures yesterday from the Royal Institution of Chartered Surveyors show how quickly sentiment is souring. A very significant majority of estate agents are reporting falling prices. The volume of transactions is sliding, buyer inquiries are dwindling, while the stock of properties languishing unsold is rising.

It’s not all doom and gloom. Sound demographics and supply constraints still provide underpinning. Taylor Wimpey said yesterday that while this spring would be subdued, the medium-term outlook was promising.

Conventional wisdom has it that a prolonged and gentle slide in prices would be preferable to a more sudden jolt. The latter would be too much of a shock, making people feel poorer and leading to a collapse in consumer spending, which accounts for two thirds of the economy. A sharp economic slowdown, a recession even, would be inevitable. Yet the former looks no picnic either. A prolonged period of shrinking wealth levels could be more painful still and ultimately lead to more economic damage. Employers might weather a short-lived shock without slashing jobs and pulling capital expenditure plans. Several grinding years of slow or no economic growth, however, could be worse for business confidence overall.

Given the choice between pain today and pain tomorrow, ministers, business leaders and consumers will usually opt for the latter. However, classical economics suggests that the quicker prices adjust to a new equilibrium, the better for efficiency, not to mention the millions of first-time buyers currently priced out of the market. A short, sharp shock might be the lesser of two evils. Just don’t expect estate agents to agree.

(The Times, 16th January 2008)

The essence of marketing is to understand your customers’ needs and develop a plan that surrounds those needs. Let’s face it anyone that has a business has a desire to grow their business. The most effective way to grow and expand your business is by focusing on organic growth.

You can increase organic growth in four different ways. They include:

·   Acquiring more customers

·  Persuading each customer to buy more products

·  Persuading each customer to buy more expensive products or up selling each customer

·  Persuading each customer to buy more profitable products

All four of these increase your revenue and profit. Let me encourage you to focus on the first which is to acquire more customers. Why? Because by acquiring more customers you increase your customer base and your revenues then come from a larger base. How can you use marketing to acquire more customers?

·  Spend time researching and create a strategic marketing plan.

·  Guide your product development to reach out to customers you aren’t currently attracting.

·  Price your products and services competitively.

·  Develop your message and materials based on solution marketing.

The Importance of a Target Market in Small Business

When it comes to your customers keep in mind the importance of target marketing. The reason this is important is that only a proportion of the population is likely to purchase any products or service. By taking time pitch your sales and marketing efforts to the correct niche market you will be more productive and not waste your efforts or time. It’s important to consider your virtual segmentation by selecting particular verticals to present your offerings to. Those verticals will have the particular likelihood of purchasing your products and services. Again, this saves you from wasting valuable time and money.

Small Business Marketing and Large Business Marketing are Different

 If you are like the majority of small business owners your marketing budget is limited. The most effective way to market a small business is to create a well rounded program that combines sales activities with your marketing tactics. Your sales activities will not only decrease your out-of-pocket marketing expense but it also adds the value of interacting with your prospective customers and clients. This interaction will provide you with research that is priceless.

Small businesses typically have a limited marketing budget if any at all. Does that mean you can’t run with the big dogs? Absolutely not. It just means you have to think a little more creatively. How about launching your marketing campaign by doing one of the following:

·  Call your vendors or associates and ask them to participate with you in co-op advertising.

·  Take some time to send your existing customers’ referrals and buying incentives.

·   Have you thought about introducing yourself to the media? Free publicity has the potential to boost your business. By doing this you position yourself as an expert in your field.

·   Invite people into your place of business by piggybacking onto an event. Is there a concert coming to town, are you willing to sell those tickets? It could mean free radio publicity. If that is not your cup of tea, how about a walkathon that is taking place in your area, why not be a public outreach and distribute their material?

When you do spend money on marketing, do not forget to create a way to track those marketing efforts. You can do this by coding your ads, using multiple toll-free telephone numbers, and asking prospects where they heard about you. This enables you to notice when a marketing tactic stops working. You can then quickly replace it with a better choice or method.

Getting Started with Small Business Marketing

By being diligent in your marketing and creating an easy strategy such as holding yourself accountable to contact ten customers or potential customers daily five days a week you will see your business grow at an exceptional rate. The great thing is it will not take a large marketing budget to make it happen.

Source: About.com

The housing market finally seems to have turned. Analysts have been predicting a slowdown since interest rates first went up in August 2006, yet the boom continued in many areas. Annual house price growth has been running in double digits for much of the year but all of that is now changing.

Prices fell by 0.8 per cent last month according to Nationwide – the largest monthly fall since 1995 – and the annual rate of growth has slowed from 9.7 per cent in October to 6.9 per cent. There are signs that the market is also cooling in London, which has been one of the strongest regions this year. Property values in parts of London have surged more than 30 per cent since January according to Knight Frank, an estate agency, but prices in some areas are now falling as the credit crunch and five quarter-point interest rate rises take their toll.

All the indicators now point to a slowing market – estate agents are seeing fewer enquiries from prospective buyers, mortgage lending for purchases is slowing and more surveyors are reporting price falls, than price rises.

Analysts are not expecting the market to crash but homeowners are being warned not to expect the value of their property to rise significantly over the next few years. The most bullish forecast is for 3 per cent growth next year, but many commentators expect prices to remain flat – Nationwide building society is forecasting zero growth as is the Royal Institution of Chartered Surveyors (Rics) and Capital Economics, a consultancy, thinks prices will fall by an average of 3 per cent. However, the national average will mask huge variations in the strength of the market is different parts of the country. We look at what the experts think will happen at a regional level.

London
House prices in the capital have been one of the main drivers for growth this year and most analysts expect it to remain one of the strongest areas. Estate agency Savills thinks prices will rise by an average of 5 per cent in 2008. While higher than the national average, the London market will be significantly weaker in 2008 than 2007.

The credit crunch is expected to have a significant impact on London house prices. A record £8.8 billion was paid in City bonuses last year and an estimated £5.5 billion of that was invested in property. However, the Centre for Economics and Business Research has predicted that bonuses will fall by 16 per cent to £7.4billion this year. It also warns that 6,500 jobs in the City could be lost. Savills believes a knock-on affect from this will be a sharp drop in the amount of money City workers plough into the property market next year. As demand softens, price growth will slow.

Nationwide is forecasting 1 per cent growth in London house prices next year. However, Fionnuala Earley, chief economist at the building society added that there are significant factors, which will help underpin the market in the capital. She said: “The supportive factors for London prices are severe supply shortages, the positive economic impact of Olympic spending, and a likely continuation of demand for prime central London properties from overseas buyers, particularly those from oil-producing and emerging market economies.”

South East
The property market in many parts of the South East is driven by the same factors which influence house prices in London, and, as such, it boasts some of the country’s most expensive homes.

At the top end, demand comes from wealthy homeowners who work in London, but want to live outside of the capital. While prices at the bottom end of the market have been pushed higher than the national average by people who cannot afford to live in London and seek more for their money in the surrounding areas. As a result, the commuter belt is spreading further and further out.

As with the capital, analysts expect the South East to be one of the most resilient regions during the market slowdown. Savills is forecasting annual growth of 4.5 per cent, while Hometrack, a property website, thinks prices will rise by an average of 1.5 per cent in the South East next year. Hometrack’s national forecast is for just 1 per cent growth in 2008.

Scotland
Nationwide believes Scotland will be the strongest performing region next year and it is forecasting price rises of 4 per cent in 2008. Savills also thinks prices in Scotland will rise by 4 per cent next year and Hometrack is forecasting price rises of 3 per cent.

The reason for this is that affordability is least stretched north of the border so the impact of this year’s interest rate rises should be less marked. Ms Earley said: “Scotland has not participated as strongly in past house price boom cycles, and this probably makes it somewhat less vulnerable to weaker conditions in the UK market as a whole.”

The average house price in Scotland is £141,158, compared with the national average of £198,898, according to Halifax. There are areas of Scotland, where house prices are much higher than the average, notable parts of Edinburgh where the values of some properties are not dissimilar to prices in the South East.

Northern Ireland
Opinion seems divided as to the prospects for the housing market in Northern Ireland. Prices there have almost doubled in the last two years, and having been well below the national average for years, the current average is £221,004, according to Halifax.

Hometrack thinks the market in Northern Ireland will continue to be strong in 2008 – it is forecasting price growth of 3 per cent. However, Nationwide is expecting it to be the weakest part of the country. It is warning that prices will fall by an average of 5 per cent.

Ms Earley said: “Northern Ireland has become the least affordable region for first time buyers. This is due mostly to the phenomenal house price growth that the Province has seen over the past couple of years. At the end of September, prices were up by more than 40 per cent year-on-year, while earnings growth remained in the low single digits. At this stage there has been some overshoot of house prices, and we expect some falls next year.”

Demand has all but dried up according to Rics’ latest survey. Aiden Conway at Patrick Andrews Chartered Surveyors in Londonderry reported that demand in the lower price bands has virtually disappeared. And Bronagh Boyd at Digney Boyd estate agency in Newry, County Down, said: “There is no demand at present and we are advising clients to let their properties for the next six months if possible. Even if we reduce the prices there is no demand, so we are trying to keep prices reasonable.”

South West
Savills is forecasting price rise of around 3 per cent in the south west, but Nationwide thinks prices in this region will fall by 1 per cent.

The South West has been popular with second homeowners over the last few years and many locals feel they have been priced out of the market. However, demand from would-be second homeowners is expected to subside as a result of the financial crisis and higher interest rates.

Some estate agents are already experiencing a slowdown. Robin Thomas at Strutt & Parker, said: “The October market was quiet with viewings down. Vendors need to adjust prices to achieve sales.”

West Midlands
The West Midlands has been one of the weaker areas this year, with prices having risen by 4.7 per cent in the 12-months to the end of September, according to Halifax. The market is expected to remain soft next year, with Hometrack forecasting rises of 1 per cent and Nationwide expecting prices to be flat – some estate agents are already seeing the market weaken further. John Stevenson at John German estate agents in Burton-on-Trent, Staffordshire, said: “The market is getting flatter and flatter.”

However, as with all regions, some areas will do better than others and in order to get the 0 per cent growth that Nationwide is forecasting, prices will rise in some parts and fall in others.

Prices are already falling in some parts of the West Midlands – an oversupply of new build flats in the centre of Birmingham means that some owners are being forced to sell for far less than they paid a few years ago and this is likely to continue. At the other end of the spectrum, prices in Stratford Upon Avon and Leamington Spa have been rising very strongly this year, they were up 27 per cent and 20 per cent respectively in the year to September. Growth will probably be slower in 2008, but prices will more than likely continue rising.

East Midlands
Nationwide is forecasting zero growth in house prices in East Midlands as well, which means prices in some areas will fall while others see small increases.

Most at risk of price reductions are new build flats. Like in Birmingham, there have been a huge number of one and two-bedroom apartment built in places such as Nottingham. Many of these have been bought by landlords who are struggling to find tenants due to a glut of supply. As a result, they are being forced to sell and some are already facing significant losses.

In other parts of the region, estate agents are reporting a slow market. Mark Newton at Newton & Fallowell in Grantham said: “It has gone very quiet. New applicants and viewing are at their lowest level all year and the viewers that are about are offering at least 10 per cent below asking price. We’ve got a tough time ahead.”

East Anglia
The market in East Anglia could be more buoyant than that in the midlands, with Savills forecasting price rises of 3 per cent next year. Some parts of the region benefit from demand from London commuters, which should help underpin prices, but as you get further away from the capital things are likely to be quieter. Hometrack and Nationwide thinks weakness in these areas will pull the annual rate of growth down to 0 per cent next year.

North
Homeowners are warned to expect price falls of up to 2 per cent next year. Both Hometrack and Nationwide expect prices in Yorkshire & Humberside and the north east to fall in 2008. Savills also expects the market to be weak although it thinks slight rises of about 0.5 per cent could be achieved – this will still be lower than inflation, so in real terms prices will be lower.

Paul Airey at Paul Airey Chartered Surveyors in Sunderland, Tyne & Wear, said that market there has frozen and the only vendors achieving sales are those who are prepared to reduce their asking price. However, in Harrogate the market is much stronger, thanks to demand from buyers looking to move into the area.

Tim Robinson at Knight Frank in Harrogate, said: “Sales continue to be strong and we are seeing plenty of good new stock coming to the market.”

North West
Average house prices are also set to fall in the North West next year, with Nationwide forecasting falls of 2 per cent. New build flats in some areas of Manchester and Liverpool could fall by more, while the prices of properties at the upper end of the market in parts of Cheshire and the Lake District should prove more resilient.

Generally, supply shortages tend to be less of a problem in the north so if demand weakens it will have more of an impact – in areas where there is a shortage of property up for sale, prices can remain largely unaffected even if the number of buyer enquiries fall.

Wales
Having risen very strongly in 2006 and the first half of 2007, house price growth in Wales has already started to slow in many areas. Savills is forecasting a slight increase of 1 per cent next year, but Nationwide thinks values will slip back slightly.

Estate agents said that many buyers seem to be waiting to see if interest rates fall next yeast. Kelvin Francis at Kelvin Francis & Co in Cardiff, said: “Plenty of viewings are taking place but most buyers are holding back before making offers to see what happens to interest rates. If the Bank of England cuts rates, that will reassure many. There is a wish to buy, but at the moment buyers expect reductions and vendors will not give them.”

(Source: The Times, 03/12/2007)

The average asking price for a home in England and Wales fell by 0.7% in November, with all regions except London seeing a downturn, a property website said today.

In a further sign of a slowdown in the market, Rightmove said there had been an early onset of the traditional winter slump in sales, increasing the average time a property spends on the market before a sale was agreed to 92 days.

This is a jump of seven days from October’s figure, and the highest November figure since Rightmove began keeping records in 2002.

The index, which monitors the prices of properties listed by 12,500 estate agents, suggests prices are at the same level they were four months ago, while the rate of year-on-year price inflation has fallen to 7.9%.

The average asking price for a house is now £239,986, down from £241,642 in October. Rightmove said it expected the slowdown to continue, with more falls in December and the first part of the new year.

These would be offset by small price gains later in the year, fuelled by a more stable environment and underlying demand for homes, resulting in a flat market in 2008.

The figures are similar to those released by Nationwide last week: the building society predicted growth would fall 0% next year.

“Prices are set to flatline in 2008,” said Miles Shipside, commercial director of Rightmove.

“While we do not expect a price drop overall, there will be parts of the country that are over-priced and over-supplied for the likely levels of affordability and demand next year.

“In these areas, motivated sellers are starting to cut their prices and will need to be the cheapest on the street to sell.

“While bargain hunters will be paying less for these properties, prices will rise where demand continues to outstrip supply in quality areas close to major conurbations, especially London.”

High stock levels

Rightmove’s survey suggests that it is not just buyers who are holding back to see what will happen to prices next year - sellers are also biding their time, resulting in a high level of available stock.

Shipside said: “If you have to sell, then seriously consider dropping your price and taking an offer now rather than holding out. You could end up being offered even less in a few months’ time.

“The good news is that with many sellers still refusing to reduce substantially, a 10% reduction can really stand out.”

Against a backdrop of falling prices around the country, a lack of supply continued to buoy growth in London, with asking prices up 2.3% over the month, Rightmove said.

Year-on-year inflation in the capital’s housing market stands at 19.6%, with the average asking price reaching £412,731.

Howard Archer, chief UK economist at Global Insight, said he agreed with Rightmove’s forecast of flatlining prices in 2008.

“While there is still some volatility in the latest data and surveys, the
overriding impression is that housing market activity and prices is now starting to slow markedly in the face of heightened affordability pressures and tightening lending practices. We expect these factors to increasingly bite over the coming months.

“Affordability continues to be pressurised by higher interest rates, elevated house prices and muted real disposable income growth,” he added.

(Source: The Guardian 19/11/2007)

Financial Times Stock Exchange (FTSE) 100 companies are going green to protect their reputation rather than as a result of concern for the environment, suggests a UK-wide survey of opinion formers.

The Green Washers and Green Winners survey, compiled by communications and research team Chatsworth, polled 1200 national and trade journalists, sustainability experts and political groups to measure the perception of which companies are leading the way on sustainability issues, and which are more concerned with image over substance. 

Results suggested that the main motivation for UK companies to adopt green policies is to protect their reputation (27 per cent) with just 18 per cent believing the main motivator is good business sense. Only one per cent of those polled believe genuine concern for the environment is the key driver for UK companies to adopt green policies.

Nick Murray-Leslie, director of Chatsworth Communications, says, “Green-fatigue is setting in and companies need to rethink the way they communicate their sustainability programmes. Many opinion formers appear to be losing faith in the real intentions of UK corporates to meet their sustainable objectives and many detect more than a faint whiff of insincerity from the FTSE 100 and its commitment to sustainable practices.

“Perceptions as to the sincerity and effectiveness of corporate green campaigns are closely linked to sector.  No matter how hard oil companies or airlines try to improve their green credentials, their efforts are always likely be perceived as greenwash, as they are ultimately still big net polluters. 

“The amount being invested in terms of marketing and public relations on sustainability could probably buy you a large wind farm.”

Amongst those considered to be most guilty of ‘greenwash’ by respondants were global mining company Rio Tinto and oil giant BP, which came under fire for its high profile pollution activities as part of its core activities in the energy sector. Unilever and HSBC were amongst the top five green winners.

The results suggest increasing cynicism as to whether UK businesses are tackling environmental issues out of a genuine desire to protect the environment or merely to create an eco-friendly corporate image. “Trusted companies are those which are perceived to be green on the inside, not just on the outside, and their messages on green issues are just part of the work they are doing across their entire operations and not an end in themselves,” says Murray-Leslie.

Source: B2B Marketing, 29/09/2007