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Where Next For Retail?

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Lots of bad news for retailers over the last few months.

See graph:

mew.gif

The graph shows MEW, both in monetary value and also as a % of post tax income.

If retailers think they have it bad now, then this shows how much worse it can get.

The graph shows that MEW has fallen by £10 billion from its peak.

That is £10 billion not available for people to spend in retailers.

Looking at the graph there is still around £8 billion being spent via MEW.

This represents about 4% of post tax income.

I noticed in some other graph a while back that MEW went negative during the last crash (ie. people actually over paid on their mortgages rather than securing further borrowing).

If sentiment changes so that this happens again, and for arguments sake MEW goes negative on this graph to the tune of £2 billion (very possible IMHO) then the retailers would lose a possible £10 billion more.

Comments?

post-692-1143455091.gif

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My comment is to ask one of those potentially annoying "what would happen if?" questions.

Many people have said that Gordon Brown would be very reluctant to let the property market crash. Others have asked how much control he has over it. But there might be a third choice.

What would happen if Gordon Brown was faced with two possible scenarios. Either let the property market crash, or to have a major meltdown in retail sales. Assuming that it would be a clear either-or situation, what would he do?

Billy Shears

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Guest consa

That graph looks just like the HPI graph but a bit further back, could this be what we should be looking at more closely for an early indication of the future direction of prices

can we get a long term MEW graph plotted over HPI long term ?? any takers all you graphical nutters :lol:

Edited by consa

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My comment is to ask one of those potentially annoying "what would happen if?" questions.

Many people have said that Gordon Brown would be very reluctant to let the property market crash. Others have asked how much control he has over it. But there might be a third choice.

What would happen if Gordon Brown was faced with two possible scenarios. Either let the property market crash, or to have a major meltdown in retail sales. Assuming that it would be a clear either-or situation, what would he do?

Billy Shears

Morning Billy.

I don't think Brown has the luxury of that choice.

If an HPC happens then retail suffers too.

Retail suffering is itself a symptom of peoples sentiment. Negative sentiment due to perceived stagnant/falling housing market.

I'm not sure its possible that a massive retail slowdown would be caused by anything other than people:

  • Not having the disposable income to spend (for example due to squeezed disposable income)

  • Don't want to spend the money (for example due to negative sentiment caused by falling HPs)

An HPC would certainly lead to a retail slowdown.

But a retail slowdown does not neccessarily lead to an HPC, as a retail slowdown could be caused by other factors (for example massive new tax burdens).

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I don't think Brown has the luxury of that choice.

If an HPC happens then retail suffers too.

Retail suffering is itself a symptom of peoples sentiment. Negative sentiment due to perceived stagnant/falling housing market.

I'm not sure its possible that a massive retail slowdown would be caused by anything other than people:

  • Not having the disposable income to spend (for example due to squeezed disposable income)

  • Don't want to spend the money (for example due to negative sentiment caused by falling HPs)

An HPC would certainly lead to a retail slowdown.

But a retail slowdown does not neccessarily lead to an HPC, as a retail slowdown could be caused by other factors (for example massive new tax burdens).

Good points. But there might be scope for one without the other in a very short time scale. I.e. a rate cut could give more people more spending money and boost (or save retail) with it taking quite a long while for the housing market to overheat. When is the next election? Though, that only works one way, as you say you can't have HPC without adversely affecting retail.

Billy Shears

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Guest The_Oldie

I read a snippet today (Express quoting a Sunday paper) that some of the big retail outfits are in trouble finding the funds to pay their anual rents which are due at the end of this week.

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I read a snippet today (Express quoting a Sunday paper) that some of the big retail outfits are in trouble finding the funds to pay their anual rents which are due at the end of this week.

Interesting. If they can't afford the lease then it's effectively curtains unless the landlord is willing to re-negotiate.

There may be a further impact on the previous leaseholder if they simply assigned the lease on as the landlord can chase them for any arrears of rent.

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I read a snippet today (Express quoting a Sunday paper) that some of the big retail outfits are in trouble finding the funds to pay their anual rents which are due at the end of this week.

I think the margins some of these guys run on are so narrow now, that some of their business models will be untenable if sales drop below a certain level. Its not just cheap imports that are responsible for cheap consumer goods. The big players have been screwing down all their other costs for years - I doubt many of them have much room for manouvering.

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I think the margins some of these guys run on are so narrow now, that some of their business models will be untenable if sales drop below a certain level. Its not just cheap imports that are responsible for cheap consumer goods. The big players have been screwing down all their other costs for years - I doubt many of them have much room for manouvering.

I wouldn't say that any of the "Big retailers" are cheap though.

I wonder how flexible landlords are going to be if the high street really does go tits up. Surely better to have a unit occupied at a reduced rent than empty and delapidating for years.

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Guest Riser

That graph looks just like the HPI graph but a bit further back, could this be what we should be looking at more closely for an early indication of the future direction of prices

can we get a long term MEW graph plotted over HPI long term ?? any takers all you graphical nutters :lol:

I knew I had one somewhere, just needs updating :)

Do you have the last 12 months figures MEW as % of income NFTB ?

MEW.gif MEW drops first then house prices follow

post-1619-1143464756.gif

Edited by Riser

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Guest The_Oldie

I wonder how flexible landlords are going to be if the high street really does go tits up. Surely better to have a unit occupied at a reduced rent than empty and delapidating for years.

Indeed, I'd love to be a fly on the wall during their negotiations. I wonder who will blink first, landlord or tenant?

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Guest consa

I knew I had one somewhere, just needs updating :)

Do you have the last 12 months figures MEW as % of income NFTB ?

MEW.gif MEW drops first then house prices follow

Thanks riser, this is the best indication I have seen yet!!! we should be watching and tracking this more closely ;)

BTW guys apologies for butting in on the thread

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I knew I had one somewhere, just needs updating :)

Do you have the last 12 months figures MEW as % of income NFTB ?

MEW.gif MEW drops first then house prices follow

Cheers. Nice graph.

It'll be interesting to see what happens next for MEW, particularly in light of your graph.

Is it updated to the latest HaliWide / BoE data.

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Guest Riser

Cheers. Nice graph.

It'll be interesting to see what happens next for MEW, particularly in light of your graph.

Is it updated to the latest HaliWide / BoE data.

Its nationwide data to Q3 2005 do you have a link to the MEW data and I will up date it.

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Indeed, I'd love to be a fly on the wall during their negotiations. I wonder who will blink first, landlord or tenant?

Keeping my eyes open as I walk around I've noticed more and more commercial premises are empty - some even in prominant locations. Also noticed signs offering "flexible terms".

Also seems to be vast amounts of office space available yet developers are still building more!

I suspect landlords will stick to their guns and insist on their dues under the lease. When the tenant goes bust then they will offer "flexible terms" :lol:

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Guest consa

Its nationwide data to Q3 2005 do you have a link to the MEW data and I will up date it.

Yep and then start a new thread, this is good well done. just look at the fall off which we are about to see in HPI and the HPI always overshoots by a long way as well.

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Its nationwide data to Q3 2005 do you have a link to the MEW data and I will up date it.

Just checked BoE and their data for Q3 2005 was released 3 January 2006.

So given that, I would expect the data up to Q4 2005 to be released around 3rd April 2006 ish.

So no updates yet, but hopefully they'll have updated MEW data soon.

Yep and then start a new thread, this is good well done. just look at the fall off which we are about to see in HPI and the HPI always overshoots by a long way as well.

I'd second that.

That graph deserves its own little pinned thread.

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Hey guys, thanks for more good new for the HPC'er and I suggest they turn those ugly shopping malls into housing - heaven forbid but? In Norwich they just can't stop building malls, and the old city centre still has it's retail outlets as well.

This town (town) - is coming like a ghost town.

All the rents come crumbling down.

This town (town) is coming like a ghost town.

Folks won't buy no more.

Except for out of town reatil parks. mmm. my rhyming skills need developing.

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I read a snippet today (Express quoting a Sunday paper) that some of the big retail outfits are in trouble finding the funds to pay their anual rents which are due at the end of this week.

I've been looking for a new bed and sofa at quite a few of the big and small outlets in the NW over the past three weeks. The girlfriend and me have been the only punters in 90% of them all!! Our local MFI only opens a couple of days a week now. The only shop that has had anyone in was IKEA? If this is what it is like any where else in the country there will be a lot more shops going belly up in the next 6 months.

Does anyone know if the big out of town places have any allowance for a negative rent review in the lease contracts??

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These are redundant really as Riser's is more informative, but since I just had such fun making them I thought I'd post them anyway - never done this before so hope it works. The data is the same for both, I smoothed it for the second graph. They compare total(?) mortgage equity withdrawl from the BoE with nationwide houseprices adjusted for inflation.

These are redundant really as Riser's is more informative, but since I just had such fun making them I thought I'd post them anyway - never done this before so hope it works. The data is the same for both, I smoothed it for the second graph.

2nd smoothed graph should be attached to this post? :blink:

mew_and_hp.bmp

smooth_mew_and_hp.bmp

mew_and_hp.bmp

smooth_mew_and_hp.bmp

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My comment is to ask one of those potentially annoying "what would happen if?" questions.

Many people have said that Gordon Brown would be very reluctant to let the property market crash. Others have asked how much control he has over it. But there might be a third choice.

What would happen if Gordon Brown was faced with two possible scenarios. Either let the property market crash, or to have a major meltdown in retail sales. Assuming that it would be a clear either-or situation, what would he do?

Billy Shears

He would support the property market obviously. In the short term, he would be looking at the interests of a large number of voting homeowners, vs a not so large number of workers in the retail industry.

But, what lever do you think Gordon Brown has in the short term to do anything about either?

frugalista

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Lots of bad news for retailers over the last few months.

See graph:

mew.gif

The graph shows MEW, both in monetary value and also as a % of post tax income.

If retailers think they have it bad now, then this shows how much worse it can get.

The graph shows that MEW has fallen by £10 billion from its peak.

That is £10 billion not available for people to spend in retailers.

Comments?

Interesting in that the 2003-2006 part mirrors the main graph on the front page on this site!

If someone could superimpose this graph onto it to see how it fits.....

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BBC News 24............. Dewhurst the butchers are in administration.

What a shame, I would love to have a local butcher to buy from, you just can't beat the personal service, and to help the local self employed. How I hate to buy my meat and veg from a supermarket. Our local shops are a dying breed, but I am prepared to travel to get quality and service and to support our small businesses.

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  • 301 Brexit, House prices and Summer 2020

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      • down 5% +
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