It is getting harder to ramp up property

Barrow on Furness; the times must be getting desperate. Is this the only town in the UK still enjoying the bubble?

Barrow-in-Furness, in prime position on Cumbria's “Energy Coast”, is definitely having a moment. The buzz is coming from its proximity to Sellafield, the transformation of its former industrial port into “the Waterfront”, a £200million marina, business park and housing scheme, and its MP, John Hutton, Secretary of State for Business and Enterprise, who is well-placed to talk the town up.

Now comes the news that BAE Systems, a local employer, has won the contract to build two super aircraft carriers, creating at least 900 jobs. This is a prime example of the unusual regeneration process in “Barrow”. The comeback of the town is not happening through cappuccino bars and “lifestyle” hype, but with hard economic investment. Millions of pounds are being poured into the town; at BAE Systems, for example, a £40million “ship-building hall” will be created.

“Barrow is bucking the trend,” says Stuart Klosinski, industrial development manager at Furness Enterprise, which promotes and supports Barrow businesses. “What we have seen recently is a buoyant housing market affected by large-scale recruitment into the area. As well as BAE Systems and Sellafield up the road, we also have major companies such as Kimberly Clark based here and other firms that require technical, managerial and professional staff.”

Year-on-year, house prices in Barrow have risen 11 per cent, and are now on average £111,588; the national average is £183,626 (Land Registry). Terraced houses have had the most significant price rise at 33 per cent, but over the past year, the volume of sales across all properties has dropped by more than 50 per cent.

CEOs giving up bonuses

Seems unlikely; but this is what portfolio.com are reporting.

In the wake of losses sustained in the credit crunch, John Mack of Morgan Stanley gave up his 2007 bonus, as did top executives of Bear Stearns and Merrill Lynch. Lately, Lehman Brothers has been the Street's problem child, and Yalman Onaran of Bloomberg News reports that its C.E.O., Richard Fuld, and its president, Herbert (Bart) McDade, told the firm's managing directors this week that they will forgo 2008 bonuses.

The bonus is typically the majority of a Wall Street professional's annual compensation. But these are hard times, with credit markets mired and with deals and offerings chilled. "I'd be surprised if other C.E.O.'s didn't give up their bonuses this year," Jeanne Branthover, the New York-based head of the financial-services practice at Boyden Global Executive Search, told Bloomberg.

Feedling the lie

The times are again feeding the lie that rents are skyrocketing.

Paragon Mortgages, which as a specialist buy-to-let lender has a huge interest in keeping landlords sweet, says that rents across Britain have risen by an average 11.7% in the past year.

As ever, the villains are the banks. Higher rates and stiffer deposit requirements are preventing tenants from breaking into home ownership, driving more people into renting and trapping those already there.

Letting agencies are apparently crying crocodile tears at queues of homeless couples begging to rent and being gazumped into even higher rents by landlords overwhelmed by demand but eager to help.

And yet an auction at London’s Café Royal last week was reportedly littered with former buy-to-let properties that had been repossessed by banks because the sums no longer added up for the cash-strapped owners.

Can both pictures be accurate? Yes, but they show how fragile the housing market has become. Paragon’s 11.7% rental increase disguises large disparities across the UK. Rents on houses have jumped by a third, while those on flats are, well, flat.

The ONS rental data says otherwise

Bank against bank

What do Fleck, Fortis, RBS and Barclays have in common? An interesting obsversation from ML-implode; the banks are getting gloomy about banking sector prospects.

"What they have in common is all have recently predicted a massive unraveling of the US financial 'system' within a few weeks. It is not as if this prediction or being on the verge of a meltdown is something new. The financial system has come apart several times in the past year but the Fed has always stepped in with something that has caused the markets to calm down (on the surface) and stocks to rally. Bonds, however, have never responded quite in the manner of stock market participants ..."

Disappointment and understanding

I just loved this paragraph from last week's press release from the Council of Mortgage lenders:

“We understand the conflict between slowing economic growth and rising inflationary pressures, and the uncertainty over some of the data reflected in the split views of MPC members last month. However, the MPC had an opportunity to act to anticipate the worsening economic environment today, and it is disappointing that there has been no change. "

Despite feigning understanding about inflationary pressures, the CML remain disappointed that the Bank of England didn't cut rates. The worsening economic environment would be made much worse by a cut in interest rates. Inflation is rising extremely fast right now. A cut in interest rates would exacerbate price expectations and lead to further difficulties down the road.

Disappointed! Whatever!

The estate agent bubble is crashing

The BBC reports:

"About 150 estate agents' branches are now closing every week in the UK, according to research. Business monitor Debtwire said the number of branches had fallen from 13,000 to 12,000 so far this year."

I could never understand how all those estate agents could survive. In London, they popped up like a plague. Every High Street seemed to have four or five. Now that the market nose-diving, it is hardly suprising that it is taking down 150 estate agents a week.

Fat cat rescue

A cartoon that says it all.

(picked up from housing panic)