Wolsey believes that while the Government continues to flounder on the sidelines, activity in the housing market has sunk to an unprecedented low level. As a result, the company, leading independent finance specialist for housebuilders, has called on the Government to take urgent action, as activity falls to a low level that even surpasses the slump during the last housing market crash.
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 approximately one million.
Mike Ratcliffe, chief executive of Wolsey Securities, commented: “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.
“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.”
Mr Ratcliffe concluded: “However, because construction has ceased for some months, buyers entering the market at this time can do so with confidence that when activity returns to even a million transactions a year, property values will have risen. The next few months should be the time to buy.”
