Is NI economy going broke?

A.L.D.A

Mistral001 wrote: »

I do not mean just the retail jobs in the shops that they have replaced, but in many of the services that supplied these closed local shops. In particular, the many of the business services needed to set up the large stores and run them such as marketing, accountancy, architectutal design and legal services (I am sure there are plenty more) are carried out at headquarters based outside NI. That is basically lost jobs to GB.

Excellent point. I once worked in London and among other work, we were designing buildings in NI for large insurance companies and retail outlets.

saverbuyer

Building prices are going up? Surprising that with QE1 & 2. It’s called inflation. Are wages going up? It’s called devaluation of the currency. If interest rates rise the pound will appreciate and surprise surprise building materials (like every other imported product fuel etc) will be cheaper. High inflation with low interest rates is killing the economy. This is death by a thousand cuts.

I made no sweeping assumptions and did not mention borrowing. The reference to interest rates is just as valid when it comes to loss of opportunity (for your cash) as borrowing costs. Interest rates are at an all-time low (LOWEST EVER) which means borrowing costs will rises and saving rates will increase. So rather than tie your money up in houses which are deprecating and expect your yield based on housing benefit you would be better off placing capital in another asset class. With normal rates you will get a much better yield on other investments than houses. Silly people making long term decisions based on temporary factors. Remind anyone of all those BTLs jumping in in the last 10 years and regretting it.

Again 100% certain based on what concrete facts? It really sounds like some kind of blind faith with you. I'm say and everyone can see this. There are (100% fact) thousands of house for sale and rent throughout NI. There are thousands of incomplete developments. There are thousands houses on ghost estates. There are ZERO homeless.

What is the average household size in NI? What is it historically? I think this will tell a story.

What does this bit about "If you are worried about future government costs, I would view the current levels of house construction with considerable concern" mean. I'm lost. You're not trying to suggest that the government (i.e. the biggest landlord in the UK through housing benefit) can't just decide what they want to pay if spending becomes tight? I think you and you BTL clients should wait a few years because this is exactly what they are going to see.

Can you please show me one single area of NI that has an acute housing shortage? With actual homeless people. Please just one and I will show you houses in that area available for rent and to buy.

Can I also ask when you expect to see this wage inflation coming? It does not need to happen in this globalised world. Has there been RPI matching inflation in the last 3 years? That's a lot of catching up to do. 15% pay raises all round.

Mistral001

I think there is a big devide between rural housing and urban housing. Rural housing has not just boomed, it has exploded. There are dozens of villages which doubled in size during the house-building boom, not to mention the 1000's of 2000-3000ft2 villas in the country that were built. There is of course a large number of these properties emty. They might not appear empty, but they are.

A.L.D.A

Superbuyer the government and the BOE are deliberately taking measures that would weaken the currency. There is an argument that the Euro, Sterling and the dollar need to depreciate in value, as they are over valued and that that is a major part of the overall problem. Countries like China have been very busy keeping the value of their own currency low.

Imports are more expensive and are likely to stay that way. However a weaker currency may make exporting a little easier. I am not entirely convinced on that, but internal inflation and weak currency provide a whole set of opportunities and problems all of their own. With regards wages they tend to increase as unemployment starts to drop as I previously mentioned.

If you think interest rates are going to be greater than the rate of inflation in the decade ahead I think you are in for a disappointment.

On homelessness

http://www.poverty.org.uk/i81/index.shtml

I hope you are not suggesting that there is no one in NI living in hostels and emergency accommodation? Have you ever seen some of this emergency accommodation?

You think there is nothing to worry about in with future house supply. Fine time will tell. I believe that we need to address the problem now or it will have future costs for governments and individuals. Supply of goods-demand for goods-money supply are the factors at work. Will Banks recover I think they will and as liquidity improves we will see a more normal market. I don't regard either what happened to create the bubble nor what is happening now as normal. High property costs are not to the benefit of the local economy, but if supply becomes constricted costs generally go up and if it costs more to build than you can sell for then supply drops.

A.L.D.A

I would be interested to know what measures people think would help their individual business sectors.

saverbuyer

I will draw your attention to this part of the report "Not every household that presents as homeless is eventually found to be so by the Housing Executive." This report details people who themselves (without checks) present themselves as homeless. It's called working the system to get that HA or council house beside mommy. It's worth mentioning also that you can live in a council house with you parents, have a child and STILL get a house of your own. There are many many many ways to work the system. Homelessness is not a major problem here. Everyone has a roof over their heads. Are you saying everyone should have the right to a free house of their choosing in the area they want????? Is this the demand of which you speak???? Should we the productive tax paying members of society pay for this through our taxes? Should we do this to restart the construction sector and related services? Personally I think we should not. People have a right to shelter not a free 3 council/housing benefit house with two people living in it. We do not need to build more houses because we have a very limited private sector who when prices drop to affordable levels will be able to afford to buy with the massive current supply.

You just spout the declaration "we need to build more". There is no supply issue. There is ZERO evidence of a housing shortage in NI now or in the future. Just because a few builder buddies say it is so does not mean it is.

Can I also say your point about weaken the currency only stands in a wealth creating export driven economy. We do not have this in NI. This does not help NI. We have no wage inflation in NI. This makes us poorer. Every one of us poorer. Inflation is not a magic bullet. The money people are saving with low interest rates is getting eaten with high inflation.

"With regards wages they tend to increase as unemployment starts to drop as I previously mentioned". What are you talking about???? I can't understand this one bit. Wages rise when unemployment drops. Right and how are the employment figures looking? How have they been looking for the past few years?

Seriously this pseudo-logic makes no sense whatsoever.

I don't see what you think is a "normal" housing market. I can tell you that historically it is an average price based on 3.0 - 3.5 single average earnings. This is normal.

Property cost for the past 15 years has been a function of credit supply not supply and demand. Supply and demand has little to do with it actually.

wanchai_2

Everyone I know is tightening their belts.

People are agreeing to do secret Santa at Christmas among adults in the family instead of buying gifts for each person, and limits of £30 are being imposed!

Nobody I know (from early 20s to late 30s) is buying a house right now, they are all sitting waiting for the market to bottom out - which is some way off yet.

Big ticket items are right off the agenda.

Even my previously spendthrift friends are cutting back, and shopping for clothes/shoes etc a LOT less.

Staying in (and having friends round) has become the new going out, including at the weekend.

That's my own experience, I'm sure that most of you will recognise it.

A.L.D.A

Superbuyer our views on those who milk the benefits system are probably very similar. I would welcome a real tightening up. I agree we simply cannot afford half the nonsense. I don't see why you or I, or anyone else should pick up the costs of others decisions. I also do not see why able bodied people who receive benefits should not be expected to do something in return. That said I have seen some dire poverty among the elderly and families living in a room and I think that very wrong. There were also problems with the structure of benefits for people who do not have security of employment. People who perhaps get seasonal jobs, or are employed for a specific contract. They often found they were better off not working at all. That may have changes, but it was a serious problem and major disincentive.

It is people who are trying to earn a living that worry me. We need to ensure that as households increase in number the number of habitable houses also increase. Not for one second do I want to see an increased budget to provide social housing. What I would like to see is zero rating repairs, rehab and alterations to dwellings to encourage reuse and modernisation of existing dwellings. At present new build is zero rated. That would help a lot of small builders and would enable them to compete with the cash in had squad! I would also like to see more flexibility from the Planning Service to enable people to modernise and enlarge their houses, particularly the smaller terrace houses. The amendments to PPS7 can be applied in a punitive manner. Also I would like to see a serious relaxation to encourage working from home. For many it would reduce the cost and risk associated with starting a business. Let us encourage people to give it a go instead of constantly putting obstacles and costs in their way.

Mistral001

A.L.D.A wrote: »

I would be interested to know what measures people think would help their individual business sectors.

I agree the NI economy does not exist of house prices only. But in saying that I do not agree with you regarding there being a shortage of houses.

I would also be interested in what posters think would help their individual business sectors. As for myself, I am in a construction-related sector and cannot really see any hope there, unless we are given the opportunity to build more commercial buildiings including industrial buildings. I have no axe to grind as I am involved in all types of construction - houses factories etc - or I used to be.

A.L.D.A

Mistral

"houses factories etc - or I used to be." There are many in construction that know that feeling!

We have extremely low house completion numbers for a few years now. Time will tell.

I think there is potential for construction in energy related work, better insulation, upgrading, air source heat pumps, energy production etc etc. As fuel costs rise the return on investment improves. There also seems to be a shortage of affordable small scale commercial premises. Places for people to fix cars, make gates that sort of business. Many were lost due to the housing bubble.

I do wish our 'political elite' would realise just how serious the problems facing our overall economy is, and do something drastic to encourage business start up and investment. I would be very interested to hear what measures people think would help them.