There have been several indicators recently that optimism in the residential market is declining.
London agents are reporting falls in asking values on prime properties and houses above £1 million in the rest of the country have been suffering. The lack of mortgage availability and most other types of finance for property continues to impact the market and with more sellers than buyers prices have been dropping in most areas.
The appointment of administrators for Connaught is a timely reminder that there will be less money available for social housing which has enabled several builders to keep their core workforce utilised - more bad news for sub contract labour as in the construction industry.
The FT reported that Barratt Developments has warned that the outlook for the market remains fragile after reporting a loss of £162.9m, down from a loss of £678.9m the previous year. Alistair Stewart, a housebuilding analyst at Investec, said Barratt’s statements about the outlook for the market “appeared to be pointedly more negative in tone than those by peers recently, reflecting our view that the market is slowing more than the industry expected”
Another concern is what the effect of the government’s change in planning policy will be. Local authorities will have greater powers which will be exercised in deciding on whether new housing developments do or do not go ahead.
All in all the next six months could be increasingly problematic for house builders and the secondary sector for commercial properties is already finding the market place harsh. With government spending being cut it is difficult to see where the volume of construction work will come from to keep the industry as a major driver for the economy, particuarly with the threat to sub contract labour not to mention full time employees.