UK property market signals slowdown

A dramatic slowdown in the UK property market has been identified by a growing number of laid off estate agents ending up jobless through fewer buyers and sellers.

Regional observers for the Bank of England say estate agents and removals companies are looking to reduce their staffing because of new pessimism for the market.

These fears have been triggered by the Council of Mortgage Lenders, which shows for September gross lending suffered its first annual decline in four years.

"Lending is slowing markedly," said Michael Coogan, director general at CML, who noted a two per cent drop to £25.4billion on last September.

The CML added the number of people taking out new loans to buy houses fell below 100,000 for the first time since February, typically a quiet month.

Michael Nower, at Countrywide estate agency, stated: "I can't say if we have not fired anyone, but we have not been on major redundancy programme. In our case, reducing staff numbers would be a case of not hiring new people to replace staff."

Meanwhile, Tailor Woodrow has warned that sales of homes this year would be six per cent lower than the 100,000 expected.

The housebuilder remarked on a growing trend of buyers taking longer to commit to deals while many reportedly emphasized too much on media speculation.

It is not the first time a housebuilder has reported longer deals but it represents the first warning that such an approach is beginning to hit sales.

Tailor Woodrow appears to agree there is a slowdown when admits trying to launch a strategy of increasing the incentives for buyers, including high–spec fittings and mortgage help.

Other builders, such as Wimpey and Bellway have described the current period as a return to normality after last year's unsustainable run.

However, John Butler, economist at HSBC, said "It is too early to call the end of the boom from two months of poor data. These indicators have proved false signals a number of times in the past few years."

Recent figures show some good news for house buyers as interest rates on fixed term mortgages have started to fall.

The Bank of England says in June the average two-year rate from banks had dipped from 5.76 per cent to 5.66 per cent in August.

Taylor Woodrow added: "With low unemployment, a continuing low interest rate environment a recognised shortage of housing stock and reasonable consumer confidences, the UK housing market remains attractive."

 

22nd October 2004

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