The war on terror is yet to hit the home front of war on

Football crazy; Swissair crisis; Parker's progress
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The Independent Online

Housing market booms as home buyers defy the terrorists. It makes a tempting headline but not much else. The most that can be read into the Nationwide's September house price survey, showing the biggest monthly increase in more than eight years, is that it is still too early to say what the impact of the US attacks will be. The raw data on which the Nationwide bases its survey consists of mortgage offers made to would-be housebuyers. This stage is only reached once a seller has agreed to a price, the buyer has provided all the necessary references to their mortgage lender and the mortgage lender has, in turn, carried out the valuation survey. Building societies and banks are not renowned for reacting with the speed of light, which means that virtually all the offers sent out by the Nationwide last month probably resulted from transactions that began well before the murderous assault on the twin towers.

Housing market booms as home buyers defy the terrorists. It makes a tempting headline but not much else. The most that can be read into the Nationwide's September house price survey, showing the biggest monthly increase in more than eight years, is that it is still too early to say what the impact of the US attacks will be. The raw data on which the Nationwide bases its survey consists of mortgage offers made to would-be housebuyers. This stage is only reached once a seller has agreed to a price, the buyer has provided all the necessary references to their mortgage lender and the mortgage lender has, in turn, carried out the valuation survey. Building societies and banks are not renowned for reacting with the speed of light, which means that virtually all the offers sent out by the Nationwide last month probably resulted from transactions that began well before the murderous assault on the twin towers.

What the 2.8 per cent month-on-month increase and the 14.8 per cent annual rise in prices actually reflects is the stimulus given to the housing market by previous interest rate reductions, not least the Bank of England's surprise quarter point cut in mid-August. Those looking for a better leading indicator of what is happening in the housing market right now might be better off reading the Hometrack survey which, small though it is, is at least based on asking estate agents what price homes are selling for. Hometrack's survey suggests that the increase in prices slowed in September for the fourth month in a row.

Anecdotal evidence, certainly from the South-east at least, suggests that a lot of house purchases were deferred or pulled altogether in the immediate aftermath of 11 September. However, we will have to wait for the Nationwide's October survey to get any real sense of what has happened to prices or the level of activity in the housing market.

Even then, the quarter point cut that the Bank sprung in the wake of the US attacks and the further reduction it could well announce this week, could have helped to offset any terrorist-induced drop in the housing market. Only when economic slowdown translates into rising unemployment is the brake likely to be applied seriously to house prices.

Football crazy

What Sir Alan Sugar, the former chairman of Tottenham Hotspur, used to call his "little hobby", actually produced a modest profit when he sold on the club to Enic last year. But for most others, an investment in football has been a one-way street to serious wealth destruction.

Even shareholders in mighty Manchester United, Europe's biggest and most profitable club, have taken a bath. Those who were drawn to the club during last year's New Economy boom have lost 70 per cent of their investment. Even investors who were on the register in the mid-1990s when United began its hegemony over the Premiership title are no better off now than the were then.

The story for shareholders in the other 20 quoted clubs, ranging from Preston Northend to mighty Chelsea, is even worse. Some clubs, notably Sheffield United, have lost more than 90 per cent of their value. Such has been the route, that the controlling shareholders of Newcastle United, Douglas Hall and Freddie Shepherd, who sold the club largely to its supporters for £190m are trying to buy it back for £40m. Peter Kenyon, Man Utd's chief executive, insists things are different at Old Trafford. For a start, the Reds carry a market capitalisation of £330m. What's more, with 50 million supporters, United has a broader fan-base around the world than any other professional sports franchise. A £303m long-term alliance with Nike begins next year, just as the latest pay-TV rights bonanza, courtesy of Rupert Murdoch's BSkyB, promises to further inflate broadcasting revenues. In addition, United boast copious ancillary revenue streams from merchandising and corporate hospitality to financial services. The average Old Trafford fan could already have his Man Utd credit card and savings account. Now he can have a mortgage, loan and insurance policy as well.

But even mighty United maybe running just to stand still. Turnover growth is slowing while players wages are forecast by Mr Kenyon himself to balloon 25-30 per cent this year, hitting perhaps £65m from last year's £50m. With no debt, United can afford to play this game for now, even if profits stall. But, for the Premier League's other clubs, the confusion of supporters rooting for their club and buying shares to bankroll the prospect looks certain to produce many more losers than winners.

Swissair crisis

Anyone who has had the misfortune of flying with Swissair in the last 12 months would not have needed telling that here was an airline in deep trouble. Cramped seating, surly cabin staff, non-existent catering. And that was just business class.

Nor is it any surprise, therefore, that Swissair has become the first of the flag-carriers to succumb to the crisis which has gripped the aviation industry since 11 September. Sabena, in which Swissair has a 50 per cent stake, may be the next to fall.

What makes the plight of Swissair all the more extraordinary is the contrast it makes with the country's railway, which operates the same timetable 365 days a year and counts 98 per cent punctuality as failure. Or, for that matter, Switzerland's road network, which is run with a Germanic efficiency that others can only gasp at.

It would be wrong, however, to assume that where Swissair flies, other carriers will inevitably follow. The airline has largely been the author of its own misfortune, embarking on a hubristic expansion strategy that was always bound to end in tears, not to mention a debt mountain 40 times the size of its market capitalisation. Nor did Swissair ever get to grips with a bloated cost structure that makes even British Airways look like the slimmest of low cost operators. Parts of the business have been rescued temporarily by the gnomes of Zurich. But it is not clear even now whether the combined forces of Credit Suisse and UBS, coupled with an injection of state aid from Swissair's government shareholders will be enough to bail out the airline in the long-term.

Parker's progress

When Sir John Parker turned down the chairmanship of Railtrack in March for "family reasons" the quip in the City was that his family had told him he would be mad to take the job. In actual fact, Sir John's decision was prompted by his wife's ill health. Well, we are happy to report that Lady Parker is now firmly on the mend and so is the career of Sir John who was yesterday named chairman-designate of the building materials company RMC. He will still find time to chair the gas pipeline group Lattice as well, but one of his three other non-executive berths at GKN, P&O Princess Cruises or Firth Rixson will have to be sacrificed. Still, it is doubtful whether Lady Parker will see much more of her husband than she would have had Sir John taken the poisoned chalice at Railtrack. But he, at least, will surely sleep more soundly at night.

m.harrison@independent.co.uk

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