Recession.............how long before its official ???

[Jessica_Wabbit]

Wasn't in business, still at school IIRC !

Car wise it dropped like a stone, especially the classics which were silly money at one point - A guy I know who trades classics lost a fortune - he's only just back on track now

The first things to get hit are toys and leisure - ask your self if you were struggling to meet the weekly bills what would be the first things to get cut out of your lifestyle ?

Sports cars, Gym membership, holidays, horses, eating out, fashion and gadgets - all stuff we can life without if we HAVE to

I wouldn't want to be over exposed in any of the above areas business wise but I'm quite happy with property

A crash??? No way. Slow down yes, but that's why interest rate hikes are on the horizon. Anyone speculating on forex at the mo? Any thoughts on outlook for Dollar, Euro, Rand against £Stg?

Clive ~ you obviously don't know many peope with horses, they get more spare cash spent on them than the people who own them! LOL! I'm just about to PM you BTW...
xx

 

[Clive]

Clive ~ you obviously don't know many peope with horses, they get more spare cash spent on them than the people who own them! LOL! I'm just about to PM you BTW...
xx

Ex wife had 6 of them ! ( told me there was just 3 though!) - we run a livery yard on the estate and I see first hand the stupid amounts of cash people are prepared to spend on a nag !

I can ride BTW

 

[Elms]

FFS guys - enough of the doom merchants spout this stuff of course it will happen - it is a self fulfilling prophercy!:wall

P

Couldnt agree more. With enough voices saying a recession is coming, a people panic and stop buying houses/cars/luxury goods etc and the cycle starts.

Chill guys

 

[Ken]

I can see the retail market getting tough, largely I think as a result of increased interest rates and and a general feeling of tougher times ahead. I don't think our new prime minister is going to help, he is not business friendly and we will soon see the true colours of a labour government. Having said all that I don't think a recession will be as abrupt as we have seen in the past as the economy is better managed.

I was chating to our bank manager today about the very low yield on property and investment business because there is so much money around looking for investments. I was recently offered the freehold on a property based on a yield of 4.5%, clearly I declined but it's likely that somebody will take it on.

 

[redfive]

I was recently offered the freehold on a property based on a yield of 4.5%, clearly I declined but it's likely that somebody will take it on.

you're right, someone will - I got 4.55% on a cash lump sum 30 day investment through a high street bank last week

- no risk, no tenant, no hard work, just £ a wodge of interest in 30 days for doing nothing.....

 

[Guam]

I could not agree more Ken I can see some slow down even property corrections I doubt we will see what I would call a full blown recession as I dont feel the preconditions exist to warrant anything like we have seen in the past. Up here in our area we have effective full employment (after deducting the workshy and unemployable) and we are out in the sticks.

Mind you it doesnt take much to screw it up, the main concern are the French and German economies and whether THEY could drag us into one imho.


Cheers

Tom

 

[Alice R.]

I woud happily give you 1988 or 1999 prices today

House prices are only relavant if you are selling

You said 10 year periods, and you would not have been so keen to buy at 1988 prices in 1998, not 2007.

House prices are always relevant, why else would you buy them as an investment ?
If they had dropped in value over the last ten years are you saying you would still be hanging on to them, and be so unconcerned about their value......no, you would'nt.

 

[Clive]

You said 10 year periods, and you would not have been so keen to buy at 1988 prices in 1998, not 2007.

House prices are always relevant, why else would you buy them as an investment ?
If they had dropped in value over the last ten years are you saying you would still be hanging on to them, and be so unconcerned about their value......no, you would'nt.

True, but I did say ALMOST without exception ! - Property is a long term investment and the disaster of 1998 is all fixed and better now - as long as you were not in a situation where you had to sell through that period your 1988 investment still looks pretty good today, in fact few other investments would even begin to compare

Maybe my situation is different in that other than the occasional exception I am not looking to make cash from house price rises short term but the income from multiple rents provides a return on capital that is safely in something with long term safety, same with land

Of course if I was borrowing the money to invest in property I would have a totally different attitude to all this, but i'm not

 

[Alice R.]

No need to be smug, "Money does not maketh the man" and OPM has made a lot of people very rich.

As for "almost", if we work on 30 years as thats as far back as is relevent to people our age, then 1 in 3 of those ten year periods was not good at all, hardly "almost all"

If your rents stopped being a good return on the capital, as the value of each house was dropping year on year, you still would not care ?..........i think i would, unless i had just won the Euro Millions on a rollover week.

Your examples and statements just do not stack up......did you inherit well ?

 

[Clive]

No need to be smug, "Money does not maketh the man" and OPM has made a lot of people very rich.

As for "almost", if we work on 30 years as thats as far back as is relevent to people our age, then 1 in 3 of those ten year periods was not good at all, hardly "almost all"

If your rents stopped being a good return on the capital, as the value of each house was dropping year on year, you still would not care ?..........i think i would, unless i had just won the Euro Millions on a rollover week.

Your examples and statements just do not stack up......did you inherit well ?

As long as tennants are prepare to pay rent then I have an income - property was all bought and paid for after I secured planning permission for a new expensive housing estate on some land and houses I originally bought as an investment with borrowed money.

Yet to inherit anything - everyones very healthy !

 

[Alice R.]

OK, you are mortal like the rest of us.....fine.

"If you had thrown a dice 14 times and got a six every throw, which way would you bet for the next throw ? "

And before anyone comes up with that old chestnut, "The odds are the same every throw", only answer if you have a good grasp of probability and trend.

 

[Clive]

I think the important question that everyone should ask themselves is just how vulnerable are they to a recession ? and is there anything that you can do to reduce that exposure ?

There can't be any harm in everyone doing that even if a recession never comes

 

[Stuart]

IT dived for several reaons:

1/. 3G Licences. 100 bn Euro across Europe, take that out of any industry and it is going to struggle. This affected fixed and mobile comms and had a knock on effect for suppliers and contractors as many things got delayed and downsized.

2/. Y2K work finished.

3/. Dot com bubble popped as investors started to look at fundamentals, assets, profits, dividends and not just share price growth. The new paradigm was not what it seemed.

This was not so broad based, since other industries were not so much affected.


The previous recession was triggered by the daft ERM nonsense.
The interest spike here tipped a lot of things over the edge.


Manufacturing in the UK has struggled for as long as I can remember.


At the moment, as I understand it, there are 2 main drivers in the economy:
1. Retail
2. Government spending.

Retail is starting to get squeezed, as I mentioned a few days ago. 78% of the average person's salary is consumed with tax, mortgage and normal household bills. This is higher than for quite a while. It does not leave much for other things.
DIY businesses are not doing so well at the mo. So although lending on property and the number of properties being sold is still high, something does not quite add up.
Inflation is coming. Everything comes from China and raw materials, labour and shipping costs are rising. I mentioned that goods prices bottomed 6 months ago, IMO.

Government spending is set to slow. The same increases of the last few years will not continue. Arguably these rises protected us from a slowdown a couple of years ago, as enjoyed by Europe.
You can see that the public sector unions want to have a fight.

Money in the economy has been shifting from the private sector to the public. This is not as efficient and is not good for long term ecocnomic growth.

Do not beleive all the emplyment stats. They have changed the measurement and what is counted, and more than a million have been added to disability. The number out of work has not changed much.
The number in work has increased, but this is due to immigration and demographics, as far as I can tell.

It will becoming a self fulfilling prophesy to an extent. But all markets follow herd tendencies. Fear and greed.

The housing market defies common sense - the average property costs more than 8 times the average salary. IMO this is not sustainable in the long term.

The city is an interesting one, that always seems to defy my logic, or at least I don't understand it. The Sarbannes-Oxley stuff seems to be helping us, perhaps with some other political issues too.
London seems to moving towards becoming the main market for the world.
Whilst I think the M&A stuff will decline, the rest looks in good shape.

The pound is very strong against most currencies.
I doubt this will continue for ever.
If it weakens this will push up import prices. Which is inflationary and will slow retail.

You also have to consider that the more EU beaurocracy we sign up to, the less competitive we become and the more the brakes will be applied.
Then we can join the no-growth or slow-growth socialist euro-zone.

I don't know what will happen, but some change will occur.
I am just not sure what the trigger will be.

 

[Andrew]

I as a relative young pup haven't been exposed directly to previous recessions, but I've seen the effects on my family.
Debt (in the form of secure mortgages, with fixed rates) wont be an issue, especially if the property is rented out - thus more than paying for itself.
Even if its not rented out, if you can cover any mortgage payments you'll be alright in the long term.

The benefits of a global economy in theory are that dips occur less often, and those which do occur are less severe... as its fairly unlikely for multiple major economies to all dive at the same time.... this hasn't yet to be properly tested in practice, so we'll see, but I expect more of a flattening in the market, rather than a big dip.

Looking at the property market, places of the same size, in the same postcode are on the market at an of average 50-80k more than the asking price of the place I bought in march. - Obviously I didn't pay the asking price, but for asking prices to rise by such an amount in just 3 month indicates that either warning signs are being ignored, or that things aren't as bad as some people feel, as there's in all likely hood a similar rise in the price being paid. (I'll check in a while when nethouseprices gets updated).

 

[Allan]

My first ever "down turn" was in 1973 during the Red Robbo era, poor workmanship, 3 day electricity etc. Not long after [1975] I went to SA where I stayed until 1989.

I visited the UK in July & aug of 1989, warmest summer on record, economy booming, yuppies everywhere were driving red 911 Targa's and Black Box were number 1 in the charts.

It was glorious. Then I accepted a job offer to relocate, went back to Sa for 7 or 8 weeks to get it all straight and came back on Nov 5th or 6th 1989....People were jumping off buildings because their portfolio's had collapsed or similar misfortunes. It followed into 1990 & 1991 then stabilised and began a slow recovery.

During all of this time I simply immersed myself into my own "Micro economy" where I really did'nt care what everyone said. I just toiled away, selecting who had wherewithall to buy my wares and worked on them. So I never really noticed a downturn because for me every day or deal was a success.

So if none you guys mind, I would ideally prefer not to take part in any upcoming recession thanks but feel free to have one amongst yourselves.

Cheers

Allan

 

[Stuart]

In a slow down, people and businesses have less money (obviously), so they tend to be more careful where they spend it.
Those people and companies that offer good service at a good price, look after their customers and are professional, can often survive.
It is a way of weeding out the bad, the lazy, the complancent and the unskilled.

Also some luxury areas can suffer. Although again, even under the worst conditions there are always people with money who want something. It is just the market shrinks, so you have to work harder at being the best.

You own experience will depend on sector and how good your goods/services are.

 

[daz]

I have gone from total doom, to my God I cant cope, it is mad at the moment,

but there are reasons, and they are staying locked up in my head:finger

One thing though, everyone wants the lowest price for everything, and I am giving them that

another sure sign of the dip on its way

all my competitors are screaming

 

[Stuart]

Exactly. Offer the right product at the right price and be prepared to try something different, and you'll be fine.
It is a catalyst for change and makes things happen.
Shoddy service won't wash, so it makes people buck their ideas up.

 

[Clive]

Or get into a market sector that consumers can't do without - our trucks are moving 90% food products and as people have to eat I can't see them not staying busy

 

[raptor]

I'm not so sure there will be a huge recession personally - a lot more of the heavy manufacturing base (which was more susceptible to UK microeconomic cycles) has gone abroad and is now more flexible anyway. Raw material prices are showing signs of stability since the Chinese govt has started to put the brakes on their overactive economy. Retail is yoyo-ing and has been for over a year but the bigger guys are no fools and have been putting their backoffices in order so that they are more flexible as noted.

Maybe there will be a slight 'property' recession but this market's been stagnated for over 2 years now anyway - people are frightened to move now IMO. From what I remember of the late 80's, a lot of people got burnt who were not used to owning property (influx of ex-council houses) but it is different now. People I talk to point to the US house market as having no influence whatsoever over here - the UK is a small country and there is more pressure on housing now then there ever was which will help keep prices up and soften a correction.

What will suffer IMO is commercial property - there surely is just too much available. Every time I drive past Green Park on the M4 I can't help but wonder how many more of these types are available.

So... With that said, when should I sell my CSL?!