 ::Well, that was an interesting experiment. No fuel for the cars, the lorries and even some motos were silent. The supermarket shelves quickly emptied and some people even reverted to drinking tap water. Throughout the business community, now priding itself by working on a ‘just-in-time’ basis, there will have been disruption to some extent. Unfortunately, looking at the causes, this is likely to become increasingly common as the lines of supply become stretched. As the process becomes more fragile, smaller and apparently less significant problems will have greater ramifications on all of us.
FFF & W - No, not an expletive, it stands for Fuel, Food and Finance - to which I have added Water.
Fuel, which basically means hydrocarbons of oil and gas, is in increasingly short supply at a time when world demand is increasing hugely. As a result, the price rises and it is unlikely that we will see any significant drop or return to the lower levels we enjoyed in the past. All businesses will have to adapt to the multiplying direct fuel costs and the significant increase that there will be in all other areas as the effects move through the economy. The effects on individuals will also put pressure on business, as people will see their salaries struggling to meet their basic costs and the cost of commuting to work rising significantly. Anybody who puts a fixed amount in their fuel tank whenever they fill up will have noticed that the car is not working as efficiently as it was! For some on a lower salary, this could mean that they will have to consider finding work closer to home or alternatively move home to be closer to work. And what of all the products that are now manufactured in China? The cost of transport will begin to have an increasing impact on the end prices of even those in the shops.
Food, essential for us all, is supplied to us through the shops that are at the end of a long chain of supply. The probability is that there will have to be more local storage and sourcing of supply. Subsidiary delivery warehouses may have to be obtained by the supermarkets to minimise disruption to long-distance haulage. As food is sourced more locally, both food shops and restaurants will have to concentrate on the provision of locally grown, seasonal items. Will people travel to that favourite restaurant, or concentrate on their own locality?
Finance is in a right mess. There is too much of it, but nobody has the confidence to spend it or lend it. The oil States must be suffocating under its weight as the price of their product is multiplied without any significant increase in costs. Where do they reinvest it? Western capitalism is looking shaky, whilst economies such as India and China are forming themselves in the same model. It is going to take some time for the financial world to regain its confidence.
Water, which is part of food really, but concerns about it are so much more obvious to us all here. We have been saying for years, “but where is the water to come from?” This year, Malaga and Barcelona have been rescued by a wet spring but forecasters tell us that this means that the summer is likely to be hotter and drier, so we could be in for a sticky autumn. In the longer term, there will have to be more water storage in the form of reservoirs, flooding valleys and blocking water outlets from the natural caverns within mountains. Around the world, all nations are going to have look to being more economic with its use.
So this article is supposed to be about property, but property and its values results from the wider economy. And this economy is in a time of significant change. Change is the lifeblood of property as no change would mean no transfers. Little demand creates minimal supply and so values stagnate. When demand is less than supply, values drop to encourage the buyers to commit themselves. Often it has the reverse effect as buyers hang on waiting for a true bargain. And these are available, though often not in the best of circumstances. There are hundreds of properties that have been repossessed or handed back to banks, which are being offered for no more than the cost of the outstanding loan. The tales of personal struggle by owners trying to avoid this happening are harrowing. However, in every society there are winners and losers and it can be a cruel world. We should not forget that the world does not owe us a living; does not need mankind to survive. It has seen dominant species rise and fall and we may be just another. The world’s economies must be looked upon in that way too. There is constant change, but as well as destruction, change can mean opportunity.::
Campbell D Ferguson
F.R.I.C.S Chartered Surveyor
Tel: 952 923 520 Mob: 650 599 701 |
