British Airways owner eyes takeover of budget carrier Norwegian, which offers no-frills invest in rental property or stock market to the U. Want to buy breakfast with gold?
Millions face British Gas price hike: Energy bills for dual fuel customers will increase by an average of 5. Shares have easily outperformed property since the credit crunch stunned markets in 2007, the latest performance figures show, even despite the recent impact of the eurozone debt crisis on stock markets. Thanks to fears about a possible debt default by Greece – and suspicions of contagion spreading to Ireland, Portugal, Spain and even Italy – shares have so far had a poor 2011. Furthermore, they have easily beaten property since the lows of 2009. Britain’s booming wealth From 2003 to 2007, Britain’s wealth boomed like never before. Thanks to years of rising incomes and ‘easy credit’, house prices and share prices rose steeply.
Over the same period, share prices also set off on an upward trajectory, after bouncing back from the lows of March 2003. This steep increase in share prices made almost everyone better off, thanks to the shares held inside pension pots, insurance policies, and other investment funds. The big crunch After five years of relentless rises came the bust. With huge losses mounting up from shaky US ‘subprime’ mortgages, banks became afraid to lend to each other.
After the inter-bank lending market froze in August 2007, a string of British banks needed bailing out, starting with Northern Rock in September 2007. An injection of tens of billions of pounds of taxpayers’ money pulled the UK banking system back from the brink. However, great damage had already been done to the UK economy, as we went through the longest and deepest recession since the 1930s. This led to a steep fall in share prices and property values, plus widespread job losses and pay freezes. Battered by a hurricane With capitalism convulsing, Britain’s wealth took a beating. After the credit bubble burst, property prices plunged. 20 months was the biggest property slump since the early Nineties – and it left homeowners and buy-to-let landlords stunned.
During this ‘financial hurricane’, share prices suffered even bigger falls. The FTSE 100 crashed from a high of 6,732 on 15 June 2007 to a low of 3,512 on 3 March 2009. After the storm The good news is that Britain’s wealth has bounced back strongly since the lows of spring 2009. However, shares prices have massively outperformed property values after the storm. In comparison, share prices have moved up very sharply since their low of March 2009. In short, since the spring of 2009, share prices have risen at 12 times the rate of property values –something that may come as a shock to homeowners and landlords. Although share prices were far more volatile than property values between 2007 and 2011, shares have nevertheless beaten property over this period.