'Talk recession, and you'll get recession'

By Edward Marr

HOW will the market be faring in six months’ time? About 300 people, most of them agents, were invited to write down their opinion at a seminar in Edinburgh co-hosted by Tods Murray and Eurohypo, the German specialist in real estate and public-sector finance.

The purpose of the seminar, with Roddy Maclennan, head of the Tods Murray property finance specialist team, in the chair, was to promote a positive outlook on the credit crunch scene. It didn’t quite succeed – 65 per cent of those there said it would get worse.

John Maclean, Scottish director of Eurohypo, agreed that the market conditions are tough but reckoned that in some respects they are better than early 2007 and in no way comparable with earlier “crashes” such as that of 1992.

He went on: “It is all about getting back to the property fundamentals, that you borrow the appropriate amount and you make sure the yield you are paying is sensible. If you talk yourself into a recession, that is surely what will follow.”

Ed Stacey, Eurohypo’s derivatives expert, said that most of the woes in the

John Maclean: "Back to fundamentals"

banking market were attributable to the near-collapse of interbank borrowing and persistently high Libor and Swap rates. He suggested that we were at the start of a new cycle and that there was some way to go before an element of normality returned.

The comment afterwards from Maclennan: “This has confirmed my view of the lack of liquidity and available funding in the market, together with the realisation that it might not be until the New Year before things approve.”