Why a slow housing market is bad news for SMEs
Posted 3 April 2008 at 10:58AM by Ian Betteridge in Investment and finance
If there was any doubt that the housing market is in a slowdown, then the news that First Direct is to stop offering mortgages to people who aren't already customers should remove it. Add this to the fact that mortgage approvals are at a 13-year low, and the picture is clear.
Obviously, this will be bad news for a lot of consumers, who will either have to delay plans to buy if they are first time buyers, or who won't be able to sell if they already own. But it's also bad news for UK businesses
Housing, and the apparently non-stop spiral upwards of property prices, has been one of the engines of the economy over the past few years. It has allowed house owners to remortgage their houses, giving them an instant windfall. It has also meant that large sums of cash have landed in the laps of older families, cashing out on larger properties that they paid off the mortgages on years ago.
This cash - which many home owners have treated as effectively free money - has been spent on home improvements, consumer goods, and much more. With this money supply now coming to an end, consumers will have to tighten their belts, which means tougher times for everyone.
So far, the effect of this has been mitigated by another factor: the dramatic decline in the amount that Britons are putting away in their private pensions. Over the past 12 months, average payments into pensions have halved - which implies that consumers are already feeling the pinch, and are simply cutting the amount they save rather than the amount they spend.
The question, then, appears to be not whether there will be tough times ahead - but how deep they will be, and how long they will last. For small businesses, the next year or two could prove to be very interesting times.
Tags: bt, bt broadband office, small business, sme
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Comments
2. At April 4, 2008 9:02 AM, Catherine wrote:
These comments are so simplified . The real reason that the pension fund payments have halved is because we the people do not trust the goverment to guard our savings. The other reason why lots of elderly have raised capital with their own home is also because the goverment will take every penny for nursing care if they go into a home. Very simple reasons.
3. At April 4, 2008 11:03 AM, Ian Betteridge wrote:
James: Sadly (in my view), "managing director" seems to be becoming rather outmoded. There's no difference in what the job actually is of course.
4. At April 4, 2008 12:28 PM, Stephan Brookshaw wrote:
SME = Small to Medium Enterprises
CEO - Cheif Exscutive Officer = The top man, the owner. Example = Bill Gates
Hope that explains James
5. At April 4, 2008 3:06 PM, Simon wrote:
There are several issues here really, we the British Mortgage payers and property owners will be paying for the mess our Banks-such as First direct, have created across the pond.
Secondly, the housing market is on a slow down, but the press and other interested party's seem to be fuelling that fire.
Thirdly, the Labour Gravy train- (yes you can have more money, if you are in the Public sector, even if your service hasn't improved); is about to end with massive debts soon to arise.
Lastly, despite the spin, the cost of living has risen dramatically, while the stock market does as it pleases, so it's no wonder that people are losing faith in pensions, anyone want an Endowment from their Independant Mortgage expert?
6. At April 5, 2008 1:16 AM, James wrote:
Come on you lot out there, wake up - Stop being so cleaver. I thought that I would get the CLEVER CLOGS (CC's) going.
Take a major magazine like RAIL - It uses hundreds of abrevations but always starts off an article with the the TITLE followed by the abrevation. E.g NETWORK RAIL (NR) or Trans Penine Express (TPE) or High Speed Train (HST)
or First Great Western (FGW) or West Coast Main Line (WCML) or National Rail Museum (NRM) etc.Every industry has its own abreviations, so please explain to others, what the abreviations you are going to use are in the first instance. Please dont assume that what you accept for granted is understood by the greater population.
SME could also be representative to some as "Simple Minded Employee" or something else to the unknowing.
Come down to earth and into the real world you (CC's).
Retired Chief Executive (CE) and Managing Director (MD)
7. At April 8, 2008 2:00 PM, Jimmy wrote:
In response to VM ( Victor Meldrew )
Ceo and Md have been around for years!
Also what's the point in having abbreviations when you are having to explain them every time you use them, this defeats the whole purpose of them.
"Take a major magazine like RAIL"
Obviously they would have to explain the abbreviations, as this is a specialist publication, probably read by 20 people and anyone reading this would need to have an explanation of abbreviations used.
Even My 90 y/o granny knows what ceo and md means !.
8. At April 8, 2008 4:22 PM, john wrote:
well between us we nearly got the point
firstly - the ever increasing house price spiral was mainly caused by certain banks lending money to people who could never begin to repay it - hence fueling the whole market at ridiculous levels.
then of course after a year the bank get to repossess the house which has increased in value by 20% which unless you are a credit card company is quite a good interest rate.
THEN the bankers rush to the bank to pay in their bonus cheques - this year just ahead of the bursting bubble - does anybody but me remember the south sea one?
as for the pensions - as mine which have been managed for 30 years plus by alledgedly reputable financial institutions both now owned by uk banks are now worth approx 60% of what i have paid in over the years - do you really expect me to increase contributions???
Durrr come back bart we need an investment supremo
9. At April 9, 2008 11:15 AM, Carl wrote:
Many good points have been raised here but I fail to see why James had to bring a discussion about abbreviations into this. Surely in the Business world SMEs and CEOs are common abbreviations to 99% of the business community. I've even seen government agenda use these abbreviations.
Thank you for your input James, it always provides a bit of amusement in my day.
Rail magazine is a classic!
10. At April 9, 2008 11:19 PM, James wrote:
Jimmy wrote:
"Take a major magazine like RAIL"
Obviously they would have to explain the abbreviations, as this is a specialist publication, probably read by 20 people and anyone reading this would need to have an explanation of abbreviations used.
Readership is actually 21,500 every two weeks.
Come on Jimmy, wake up - Not everybody is as cleaver as you are.
11. At April 10, 2008 8:52 AM, James wrote:
Let's get a few things straight.
Managing Director (MD) is not old fashioned. The position of MD is still a legally binding title for Registered Limited Companies (Ltd) and Private Limited Companies (plc) with legal responsibilities.
Chief Executive (CE) is usually used for Group Limited Companies when one senior MD has overall responsibility for all the MD's in that Group. I.e. the CE.
The title of Officer usually refers to Commissioned Officers in the Armed Forces and to Public Services, Government and Local Government for Senior Managers.
Chief Executive Officer (CEO) is the title usually used for the most Senior Managers in Public Services and to Public Servants. Etc.
The title of Senior Medical Examiner (SME) is a Medical Authority Title.
The title of Senior Mechanical Engineer (SME) is usually applied to Large Industrial or Construction or Marine Engineering Contracts or Concerns.
SME is also used for - Small to Medium Enterprise (SME)- It is a term used in the Small to Medium Business sector.
I am fed up with people who continually use abbreviations in articles without first explaining what they represent. Each and every industry has its own abbreviations which clash with others. Many people live and work in a very small bubble and very rarely go outside that bubble - They do not understand the real wider world outside their own bubble.
James Lyon - A retired MD and CE. Please see references above.
12. At April 10, 2008 3:19 PM, Mick Foley wrote:
"Readership is actually 21,500 every two weeks" - James Lyon (VM) @ 11:19PM (!) on April 9th (that was the date then!)
As apposed to "niche" magazines on heavy music or video games or the wwe which sell in exess of a MILLION whenever their print cycles come around? Let's face it Vic, It's all about the Benjamins, yeah?! If it's (by "it's" I mean the abv.'s) on the small to medium enterprises (SME) blog which of the possible meanings would you EXPECT it TO be?Bang Bang!
13. At April 14, 2008 8:54 AM, James wrote:
Betteridge wrote: The question, then, appears to be not whether there will be tough times ahead.
With money draining out of everybodies pockets into higher costs and into the banks to prop up their profits, it is the small business (SME's) that are going to suffer first, long and hard. Best of luck to all SME's.
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1. At April 3, 2008 9:30 PM, james wrote: