What Credit Crunch?

Since the summer, all we have heard about in every news report is that the world economy is teetering on the brink of collapse, that Britain is just a few moments away from total economic meltdown and that we’ll all be losing our homes and selling our grandmas on eBay by teatime.

 

But are we? Sure homeowners, stockholders, Icelandic bank investors, financial sector workers, property developers, car manufacturers and a whole host of other industries are feeling the pinch, but are there groups who may benefit from a slow down in economic growth?

 

I look no further than the end of my nose for the answer and can’t help thinking that it is a yes. With no real savings nor huge debts I am in a pretty safe position throughout all this, assuming my employment position doesn’t change. (Please Amplify bosses).

 

Looking at 4 key sectors it is clear to see that there are a few people who will emerge from the recession and credit crunch (I managed over 150 words without a mention of the double C, a new world record) with the future looking pretty rosy.

 

Housing

Pre-Credit Crunch, it was impossible to see a point where it would be possible to get on the property ladder due to the market pricing me out of areas that I would consider living in and many that I wouldn’t even contemplate. The rental market was booming due to inflated property prices and thousands of people being inspired by endless TV shows showing them how to make a quick buck through bricks and mortar.

 

Inability to sell homes means owners are turning to rental which has the knock on effect of offering more choice to those who want to rent rather than buy. With supply increasing, prices fall and renters see much greater value for money. Those renters in a position to save for a deposit throughout the crunch will come out the other side with a huge choice of cheaper priced property in the areas they want to live.

 

Motoring

When Top Gear returned to our screens last month they highlighted cases where cars are shedding huge percentages off their value the second they leave the show room. One example, an Aston Martin, had lost £50 per mile of its 2 year life, selling on the second hand market at just over £20,000, from a purchase price well in excess of £100,000.

 

Depreciation in cars is not a new thing but the scale is unheard of. The levels of depreciation are so high so that it doesn’t make any sense for consumers to buy new cars. Anybody looking to buy a car should look at waiting 12 - 18 months due to the value dropping off over that period. The market is on a downward curve, therefore both new and used prices are lower than ever; the only potential benefit to a consumer is warranties but with a car 12 -18 months old it is not the necessity that new car buyers used to look for.

 

The cost of running a car is also coming down. Diesel was selling at 134.9p per litre in July; today Morrison’s slashed their prices to 99.9p as the cost of oil plummets.

 

High Street

Traditionally you have to wait until Boxing Day for the sales to kick in, making you chew lemons with bitterness, seeing the same things you bought for your loved ones at half the price. Now it seems that the sales never end and only the foolish would ever pay full price for items. Miss Sixty and Woolworths have gone into administration and scores of others are in danger, which, while terrible for the stores and people connected to them, only mean bargains galore for the shopper as they are forced to sell off stock at hugely reduced prices.

 

Internet shopping has also pushed prices down and increased competition further. Yesterday (8th December) saw the highest number of Internet purchases on record.

My mother called me the other day hinting at what she wanted for Christmas, a new set of pot and pans. She said that there were some she had her eye on from Viners (http://www.viners.co.uk) which were £200. Just as I was about to hang up on her she added that they were down to £40. “Certainly mother, not a problem.” Christmas? Done.

 

Supermarkets

Stores that you wouldn’t previously have been seen dead in have suddenly become en vogue. Lidl has introduced Lobster for £4.99 that taste-tested higher than the same dish from Harrods food hall, which retails at well over £30. Morrison’s is not only making a splash at the petrol pump, its market share has grown, while Tesco has recently announced that its profits have increased at the slowest rate in 15 years.  Probably, we now only put 98p of every £1 spent in the UK through its overflowing tills. What is certain is that the battle for supermarket supremacy means prices are falling everywhere.

 

Last week while in Co-op, a store I’d usually avoid due to their high prices, I found that they were selling whole chickens for £1.25. It wasn’t even as if they were about to go off in the next 18 seconds, they had a three day use-by date on them. Down the next aisle, Strongbow was selling for £16 for a 24-pack.  On top of that, they were buy one get one free. That works out at 33p a can. When you consider that water rates have increased, it is probably cheaper to drink a can of cider than have a glass of water. No wonder we are a nation of boozers; we can’t afford not to.

 

So I declare: “Long live the credit crunch!” If you don’t like it, then my iPod Touch (best price, £244.99 atAmazon ) will block out your heckles as I walk to the car showroom to barter a despairing owner into parting with his pride and joy for less than the cost of a season ticket for the train. I can see this new motor, with its big boot for my bags of shopping, sitting nicely on your drive. Will you take £30,000 less the asking price? Sweet. All I need to do is stay working and keep saving... what’s that Jonathan? P45? Pass me one of those lemons to chew on; they are less than half price at least.

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