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House auctions (July 2008)

We all know the housing market is in the doldrums, but there's one area where speculators have often been prepared to take a risk and get a bargain... at a property auction.

Taking telephone bids

Radio Sheffield's Jill Womersley went to an auction in Sheffield in mid-July 2008 to see if the buyers are still out there.

"Lot 1, a house in Handsworth, had a guide price of Β£75,000... it took a while but finally sold at Β£90,000. But that was one of the few success stories of the day. Many didn't make the reserve price, and some didn't even get a bid.

"Just over half the lots in this auction sold - that's down from 75% for auctions so far this year, and 90% success rate over the past two years."

Robert Taylor has been in the building trade in Sheffield for the past 41 years. He thinks there's a realism in what's happening right now. "The housing market is inflated between 25-30%. I've been saying this for years. Now it's going back to what it should really be, where people should save at least 10-15% to buy their properties."

Adrian Little of Mark Jenkinson & Son who ran the auction visited by Jill Womersley in July 2008, admitted it wasn't the best result... "It was the hardest sale in 10+ years, but it's probably average for what's happening in the rest of the country.

"The demand and supply of property is there - what's lacking is the supply of funding... Money makes the world go round."

Howard Pressman, interviewing auctioneer Mark Little, asked about what sort of houses go to auction.

"Ten to fifteen years ago, auctions were perceived as the last resort; if all else failed you could always 'auction it off'," explains Mark. "That is coming back now, because people are under a lot of financial pressure and they see the auction route as a way of selling.

"But for every five or six enquiries I have, only one or two are suitable - the others are too good for auction and the only way you'll make it happen is by having a very very keen price which is often below what people are prepared to let the houses go at. So in those cases, I refer them to estate agents to conduct a normal sale."

In Mark's opinion, it's a great time to buy - if you're cash-rich.

"Fifty per cent of the houses sold in the auction [visited by Jill Womersley] and a good number of them exceeded the reserves substantially. There was quite a lot of activity for certain sectors - commercial, modernisation jobs, and so on. If you've got the cash it's a very good time to buy. Especially in the repossession market where properties are going for considerably less than they should be."

Barnsley Markets

Barnsley Markets redevelopment on hold (June 2008)

The redevelopment of Barnsley Markets has been billed as the 'cornerstone' of the new-look Barnsley. It'll include a department store, a cinema and other retail outlets - but in June 2008, the project was put back a year which means it won't be ready until 2012.

Although market traders should be able to move in by the summer of 2010, the delay has caused unrest in the markets. Traders think the years of disruption to the town centre will push their customers elsewhere and that the new market may be too expensive to trade in.

The Barnsley Markets development is being funded substantially by private money which comes from banks and money markets, and the cost of borrowing has gone up considerably recently. Steve Howden is leader of Barnsley Council and in June 2008 he told Radio Sheffield what exactly has happened with the project:

"Like many other retail development schemes, Barnsley market has been hit by the credit crunch. The cost of money has gone up considerably and that's affected the numbers.

"It will take us six to 12 months to look at the contract itself, and also to look at the money markets and see if things get better. It's the way the schemes work across the country, not just Barnsley."

Steve Howden says it's not all bad news though: "The council and the regional development agency Yorkshire Forward are behind the scheme, putting money in, which reduces the risk and the cost. So compared to many other schemes across the country this one is in a far more favourable position because it's not purely commercial."

But is there a chance that the delay will be extended? Steve says the Council are confident that everything will be worked out in the next year, and although it's a very uncertain period for everyone involved, not least the market traders, Barnsley Council are bringing forward other redevelopment works and plan different sorts of events for the town centre.

"There's no danger of the cranes stopping! There's the Gateway Plaza and we're bringing forward the public realm improvements so Barnsley will continue to change over the next three to four years.

"The one scheme everyone wants most is the markets and retail scheme but all the companies involved have signed the contract to keep it going forward, all the major retailers and cinema are still there.

"While we're disappointed about the delay, a delay is all it is."

Football feels the pinch (July 2008)

It's not just families and small businesses who are feeling the pinch. Radio Sheffield's Seth Bennett spoke to Sheffield United's Chairman Kevin McCabe about what effect the economic downturn is having on Sheffield United in particular, the world of football in general and McCabe's other businesses...

Kevin McCabe

"I'd love to bring in more investors for Sheffield United to help us grow forward and bring success," says McCabe, "but it's difficult in the current climate - not just in Sheffield but in the country as a whole, with the economy going into recession.

"The economic difficulties brought about by the disarray of the financial sector, hitting real estate, is very severe. The UK has now been well and truly clobbered.

As well as Chairing Sheffield United, Kevin McCabe has other business interests - in property developments. Seth asked him whether it's harder to make money available for Sheffield United when things in his other businesses must be getting a bit tighter?

"Absolutely... but what you try to do as a sensible businessman is to counteract that downturn by extending and increasing loan notes and bringing on board 'soft equity' (which can be converted into capital rather than debt).

"All this is to protect Sheffield United and to give us more resource than many of our competitors will have during these very difficult economic periods."

And what of Kevin McCabe's other businesses? "Thankfully Scarborough Developments [McCabe's property business]'s are international - Europe, the Far East, Australia - places not as badly hit as the UK.

"I'd say we've got three to five years of very difficult times before we end up with a new normality. Whether that 'new normality' is what we've been used to, personally I very much doubt. There's a reorganisation of UK society and businesses, so - tough times."

:: Is the credit crunch affecting you or your business? If you have a story to tell us, let us know.