House price downturn worst since slump of 1990s, surveyors report
Grainne Gilmore and James Rossiter
The housing market experienced its most severe downturn since the housing slump of the 1990s last month, the Royal Institution of Chartered Surveyors (RICS) will say today.
More surveyors saw house prices fall in February than any other time since June 1990. The RICS gauge of house price trends fell to minus 64.1 per cent last month, down from minus 54.8 per cent in January. In June 1990, the balance was minus 64.5 per cent.
There was also evidence that activity in the housing market has stalled, as RICS said that stocks of unsold property on surveyors’ books jumped to a ten-year high. The average number of unsold properties per surveyor rose to 92, up 8.5 per cent from January, and an increase of 48.6 per cent since February last year. This is the highest figure since 1989, when the number of unsold houses averaged 93 per surveyor.
Ian Perry, of RICS, said: “The build-up of unsold stocks will encourage buyers to negotiate lower asking prices.” (AtW's comment: no you numpty, this will encourage buyers to wait and hopefully encourage banks not to give morgages to every Jack, Peter and Bob. )
Surveyors reported that house prices fell most sharply in Yorkshire and Humberside, the East Midlands and East Anglia, while prices in London, Wales, the North and North West declined at a more modest pace.
Tighter lending criteria and uncertainty about the economic conditions have also weakened demand among buyers, RICS said.
The balance of surveyors reporting a fall rather than a rise in new buyer inquiries was 37 per cent, up from 35 per cent in January.
The big exception to this trend is in Scotland, where the gauge of house prices soared to 25 per cent, up from 7 per cent in January.
Grant Robertson, of Allied Surveyors in Glasgow, said: “After a period of readjustment, some normality is returning to the market.”
Property sales increased marginally to 24.4 per cent, up from 24.3 per cent in January, but this was still 14.3 per cent lower than the number of completions in February last year.
The gloomy figures come as the head of one of the UK’s largest housebuilders gave warning that thousands of jobs will disappear in the construction industry unless the base rate is cut sharply. Malcolm Harris, chief executive of Bovis, said the housing market was at a “tipping point” as he warned of thousands of job cuts across the industry unless interest rates are reduced from 5.25 per cent to 4.5 per cent by the end of the year.
In a trading update, Mr Harris reported that his company’s forward order book at the end of last week was 20 per cent down on this time last year.
Mr Harris said: “We need interest rates to come down to 4.5 per cent to assist affordability. There should have been a quarter point cut last month. If [buyer] confidence does not come back and demand not improve then the whole sector will have to reduce operations. Our suppliers will have to lay off people and we will lay off people. That will lead to an economic slowdown.”
Suppliers range from carpenters and bricklayers to carpet fitters.
The slowdown in the housing market has already hit Bovis’s annual pretax profits, down £12 million to £123 million for the year to December 31. It sold 2,930 homes, 193 fewer than the previous year.
In the last housing crash of 1989 to 1992 construction workers were able to find some jobs in the commercial property market where recession only began in 1992. This time round both the housing and commercial property markets are feeling the squeeze at the same time. Bovis has trimmed back its borrowing to just £44 million, meaning gearing it is at an historic low of just 6 per cent in anticipation of a tough year’s trading ahead.
Region by region:
Proportion of surveyors reporting changes in price over the past three months
North-39%
Yorks and Humber -64%
North West -41%
East Midlands -70%
West Midlands -62%
East Anglia -61%
South East -53%
South West -55%
Wales -49%
London -40%
Scotland 25%
Northern Ireland -95%
Source: RICS
Grainne Gilmore and James Rossiter
The housing market experienced its most severe downturn since the housing slump of the 1990s last month, the Royal Institution of Chartered Surveyors (RICS) will say today.
More surveyors saw house prices fall in February than any other time since June 1990. The RICS gauge of house price trends fell to minus 64.1 per cent last month, down from minus 54.8 per cent in January. In June 1990, the balance was minus 64.5 per cent.
There was also evidence that activity in the housing market has stalled, as RICS said that stocks of unsold property on surveyors’ books jumped to a ten-year high. The average number of unsold properties per surveyor rose to 92, up 8.5 per cent from January, and an increase of 48.6 per cent since February last year. This is the highest figure since 1989, when the number of unsold houses averaged 93 per surveyor.
Ian Perry, of RICS, said: “The build-up of unsold stocks will encourage buyers to negotiate lower asking prices.” (AtW's comment: no you numpty, this will encourage buyers to wait and hopefully encourage banks not to give morgages to every Jack, Peter and Bob. )
Surveyors reported that house prices fell most sharply in Yorkshire and Humberside, the East Midlands and East Anglia, while prices in London, Wales, the North and North West declined at a more modest pace.
Tighter lending criteria and uncertainty about the economic conditions have also weakened demand among buyers, RICS said.
The balance of surveyors reporting a fall rather than a rise in new buyer inquiries was 37 per cent, up from 35 per cent in January.
The big exception to this trend is in Scotland, where the gauge of house prices soared to 25 per cent, up from 7 per cent in January.
Grant Robertson, of Allied Surveyors in Glasgow, said: “After a period of readjustment, some normality is returning to the market.”
Property sales increased marginally to 24.4 per cent, up from 24.3 per cent in January, but this was still 14.3 per cent lower than the number of completions in February last year.
The gloomy figures come as the head of one of the UK’s largest housebuilders gave warning that thousands of jobs will disappear in the construction industry unless the base rate is cut sharply. Malcolm Harris, chief executive of Bovis, said the housing market was at a “tipping point” as he warned of thousands of job cuts across the industry unless interest rates are reduced from 5.25 per cent to 4.5 per cent by the end of the year.
In a trading update, Mr Harris reported that his company’s forward order book at the end of last week was 20 per cent down on this time last year.
Mr Harris said: “We need interest rates to come down to 4.5 per cent to assist affordability. There should have been a quarter point cut last month. If [buyer] confidence does not come back and demand not improve then the whole sector will have to reduce operations. Our suppliers will have to lay off people and we will lay off people. That will lead to an economic slowdown.”
Suppliers range from carpenters and bricklayers to carpet fitters.
The slowdown in the housing market has already hit Bovis’s annual pretax profits, down £12 million to £123 million for the year to December 31. It sold 2,930 homes, 193 fewer than the previous year.
In the last housing crash of 1989 to 1992 construction workers were able to find some jobs in the commercial property market where recession only began in 1992. This time round both the housing and commercial property markets are feeling the squeeze at the same time. Bovis has trimmed back its borrowing to just £44 million, meaning gearing it is at an historic low of just 6 per cent in anticipation of a tough year’s trading ahead.
Region by region:
Proportion of surveyors reporting changes in price over the past three months
North-39%
Yorks and Humber -64%
North West -41%
East Midlands -70%
West Midlands -62%
East Anglia -61%
South East -53%
South West -55%
Wales -49%
London -40%
Scotland 25%
Northern Ireland -95%
Source: RICS
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