Property Plight Continues

The property market will be one aspect of the economy in the minds of the leaders the G20 key economies when they meet in London at the end of this week. Dominique Strauss-Kahn of the International Monetary Fund says the world is in a ‘ Great Recession.’ He has warned that there could be civil unrest with millions of people forced into poverty.

Property in Britain is still in plight. Bank of England figures show that the gap between base rates and many home loans has widened – even though banks have slashed rates for savers and the BoE has brought in a succession of drastic rate cuts which means rates are now at their lowest ever figure of 0.5 per cent. It’s further proof of how lenders are still maintaining an iron grip – in spite of government pleas to start helping consumers.

Chase de Vere and Cobalt Capital – two leading and well-known mortgage brokers in London – have called in receivers and 100 people in the two firms have lost their jobs. It’s yet another indication of how desperate the mortgage market has become.

The Royal Institute of Chartered Surveyors has just put out figures showing that estate agents sales fell to a record low for the three months up to February. The RICS reckons each estate agent sold an average of 9.5 properties in the twelve week period. Sales by agents in London were even lower. They sold an average of six properties each.

The RICS figures confirm, though, a widely reported increase in interest among putative buyers. The limited number of mortgages on offer, the rigidity of the terms and the lenders demand for a hefty deposit are factors still discouraging sales.

Elsewhere in property, construction leader Bovis lost almost £80 million last year even though its sacked 60 per cent of its workforce. It wrote down the value of its houses and land bank by more than £93 million.

Scott Wilson the building design and engineering group has taken a battering on the stock market. It’s cutting ten per cent of its 6,600 staff and is freezing salaries. Its shares dropped 20p to 50 p yesterday. Clients in the UK and the Middle East were cancelling or postponing projects and some were abandoning projects which were in progress.