Friday, 24 July 2009

Close your eyes and it will all disappear!

I don’t think it’s me, but I keep seeing and reading reports that thing’s are on the mend, as far as the economy is concerned.
Is it propaganda? Is it information being fed us in order to keep the lid on top of the kettle?

Yesterday it was reported in the news on radio and TV that retail sales rose more than expected in June, this was apparently due to the heat wave we had two weeks ago. As if by magic people went out and made purchases’ of clothing and footwear.

Is it persistent and aggressive discounting particularly on food, as William Morrison’s Supermarket upgraded its earnings forecasts as the grocer lured customers from bigger rivals with its low-priced food.

75,000 homes worth at least £40,000 or more were sold in June - a rise of 15% compared with May.
This gem of information was revealed by HM Revenue & Customs (HMRC), a government outfit. However, the organisation points out that the June rise is attributed to a seasonal increase and the gross lending figure is still 48% lower when compared with June last year.
However, while all positive news that being put out points to a recovery, housebuilders Bovis, Redrow, Barratt and Persimmon have all highlighted that the lack of mortgage finance continues to hinder a recovery in the housing market.

Almost one in ten home sales falls through because buyers cannot obtain finance, a survey of members of the Royal Institution of Chartered Surveyors (RICS) carried out for The Times has found.
The conclusion calls into question the effectiveness of the Government’s strategy to revitalise the housing market. Estate agents and surveyors said that 9 per cent of agreed deals were collapsing — a picture that had not changed over the past three months. This confirmation of the continuing mortgage drought comes as interest in property purchase increases.

What I read into this is that people are still spending on plastic, as old habits are hard to give up. After a decade of readily available finance that many have become ensnared, like the fly trapped in the spiders’ web. It’s understandable that some of us will close our eyes in what is a really depressing time, and just go out and spend, whilst we still have some purchasing power, even though the moneys not ours.
As for housing, we need to remember that house prices are in some cases 7 times more than salaries; and those future generations could be paying up to 10 times more unless the number of homes being built increases.

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