Holiday Impression: UK For Sale

Tuesday, August 16, 2005

Being overwhelmed by all those negative US economic indicators having hit the wires today and which are exhaustingly commented by most bloggers in my blogroll in the sidebar I want to focus on some impressions from my recent vacation that took us on a very pleasant drive from Austria through Germany, France and England to Scotland.
  • Impression #1: Prices have become outrageous.
  • Impression #2: Gasoline prices have become even more outrageous.
  • Impression #3: UK Real estate is for sale on a massive scale.
  • Impression #4: Don't wear a backpack in the UK.
My observations on inflation or higher prices are purely anecdotal, but gasoline prices for premium gas (95 octanes) rose from 1.06 Euros in Austria to 1.24 Euros in Germany and 1.30 Euros in France to 1.37 Euros (0.94 pence) in the UK. Converted into US gallons (3.785 litres) and dollars this equals a price range between 3.24 and 4.49 dollars a gallon.
Being observant of at least the most basic health rules I cannot offer a BigMac comparison. Thanks to the healthy food we enjoyed I was able to avoid a heart attack when being presented with the bills in food joints which one can consider modest. Travelling with my teenage daughter the bill never contained much more than a pint of beer, water and two main courses. Indian restaurants will set you back roughly 25 British Pounds or 45 USD. Go to a pub and you will end up with a bill of roughly 30 GBP or 54 USD. Eat in a restaurant and 50 GBP or 90 USD are the minimum you will get away with. And I am not talking of city center hang-outs but only places off the beaten track.
Visiting the sights is another important factor in a vacationer's budget. Settle on an average 10 GBP or 18 USD for an adult and a child to gain entrance to one of those beautiful castles and palaces Scotland is known for.
If these sticker shocks haven't done it, your lodging bill will certainly keep your heart-pace in the upper end of the spectrum. Bed & Breakfast can run from 50 GBP or 90 USD for a nice place in West Scottish Kirkcudbright with en-suite baths and a magnificent breakfast to a 60 GBP or 109 USD for a dirty twin room without bath in Inverary. Maybe it would have been a bit less costly hadn't I parked my garage queen in the sight of the host who certainly knew that the village had no more vacancies.
Hotels are top-dollar. Don't expect to find anything halfway decent for less than 120 GBP or 217 USD and don't expect breakfast to be included if you're staying at a Holiday Inn.

PHOTO: Unfortunately the dozen of onlookers went on before I got my camera out.
While prices between England and Scotland don't vary that much the scenery certainly does. Anecdotal evidence only; but I estimate that at least 15 percent of the properties we passed on our drawn-out ride displayed a "For Sale" sign. This rate declines to approximately 10 percent the farther north one travels.
Despite the most recent cut in British interest rates people seem keen to get rid of their houses. Maybe the record number of personal bankruptcies that was reported in the Financial Times two weeks ago has got to do something with it.
Property prices have shown impressive rises in the recent past with some areas gaining on average 20 percent within a year. And this is the point where we come to question the "real value" of houses. A truly unscientific comparison between Austria, where housing prices are less than half of those in the US, and the UK rises the question whether badly insulated UK houses with single glazed windows are really worth that much more, taking into account that a lot of these properties are located in areas where it will be difficult to find employment with a halfway decent remuneration.
We visited a friend on the Isle of Skye, professional futures trader Duncan Robertson, who has seen the value of his two house property (with a truly great view) rising some 150 percent in the last three years. Him being a very sober analyst of financial matters, I can understand that he sees the time ripe to sell and move. As he said such gains are not sustainable and I agree on this one.
Turning south again the "For Sale" signs become more prominent again. Whether Blackpool, Liverpool or Shakespeare's home town Stratford-upon-Avon, property can be had anywhere and it will only be a matter of time until buyer's financial resources will converge with seller's expectations. My guess is that sellers will have to scale back their expectations at a distinct measure.
A last note: When you consider travelling to the UK think of something different than a day-pack as a carry-around. Carrying my small backpack that could probably easily be stuffed with several pounds of explosives I found myself at the center of attention in every shopping mall we entered.


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