With the Bank of England figures showing that only 36,000 mortgage approvals were made in June, the number of housing transactions is currently set to total just over 400,000 this year. This low level represents over a 60% drop in activity on the worst year of the 1990s housing market crash, when transactions ran at around one million.
Mike Ratcliffe, Chief Executive of Wolsey Securities, said: "Transaction levels have now dropped to dangerously low levels that have not been seen in several lifetimes. The housing industry cannot sustain this level of trade. Housebuilders are on their knees. If there isn't an improvement soon many will fold, as their cashflows will not be able to meet overheads and interest costs.
-- Advertisement --
"The Government must step in and take action now. Waiting until the autumn, whilst the stamp duty speculation continues to rumble on, will have a devastating impact on the economy. If the Government fails to act, it will ultimately be responsible for its own demise. There will be a landslide vote against the Labour Party when the next General Election takes place, if they continue to lead the nation into a recession and decimate the housing industry from which so much has been expected. The target of 240,000 per annum by 2016 is now impossible. The nation is also facing a severe housing supply crisis.
"In the last few weeks there have been signs that the housing market's deterioration was slowing with a number of key indices, including the Halifax, showing a slow down in price falls. Our own portfolio of over 2,500 units has also shown a slight uplift in reservations. This could well be the first indicator that we have reached the bottom of the market. With transactions at an historic low level the only way now can be up. However, the Government has to act now and put a stop to the stamp duty speculation or the state of the housing market will have a catastrophic impact on the economy.
"Gordon Brown should take the lead of the Spanish Government that has just announced a series of measures to kick start their flagging economy, including the provision of state loans to help low income families into their first homes. If the Government takes action now to introduce a stamp duty holiday and implements a loan deposit scheme for first time buyers, then buyers will re-enter the market and builders recommence construction."
(CD/NS)
