The dire state of the British housing market will be underlined this week when Savills, the upmarket estate agency chain, reveals that it is axing scores of jobs as deals dry up and selling prices tumble. In London, Savills will say, homes selling for £900,000-plus are simply not moving as sellers hang on in the hope that they can get a better price in a year's time. The company will disclose that homes in some parts of the capital have fallen in value by as much as 10 per cent and that sales volumes have dived by nearly 50 per cent. The company employs more than 3,000 people in 111 UK offices, but that number is expected to reduce significantly by the end of this year as fears grow that house prices could fall by as much as 30 per cent before December 2009 and that transactions nationally could plumb levels not seen in 30 years. On Friday, HBOS also said it was closing 53 estate agency offices nationwide. A prolonged housing slump could be disastrous for the government as it cannot delay an election beyond May 2010. Savills' chief executive, Jeremy Helsby, is understood to have told colleagues that he envisages house prices falling by 25 per cent by the end of next year. The company, established in 1855, is sometimes dubbed the 'posh estate agent' as it specialises in selling houses to the affluent and super-rich. Three years ago it sold a £70m house in London to steel magnate Lakshmi Mittal. Savills will tell investors during a presentation of its interim figures that with City unemployment sharply up in the wake of the credit crunch, sales of homes between £1m and £5m have all but tailed off. Only properties selling for above that price are holding up amid continuing interest from wealthy buyers from Asia and the Middle East. Helsby will say that the market could get worse before it gets better and that deep job losses are inevitable at its UK branch network. Savills' figures will be helped by some of its other operations: it has a large property management business in Asia, which has held up reasonably well, and a fund management arm. But its commercial property advisory arm in Britain and Europe has done less well, say analysts. The company's broker, ABN Amro, is forecasting a big fall in profits for the group as a whole for 2008. The dividend is likely to be frozen. Savills' woes come amid mounting evidence that Britain is heading for recession. On Friday, government figures showed that UK economic growth had come to a standstill in the second quarter of the year. The definition of recession is two quarters of negative growth. Sir Peter Spencer, chief economist for Ernst & Young's Item Club, said: 'We have been living beyond our means. The economy is faltering. We expect negative growth for the third and fourth quarters.' RBS's UK economist, Ross Walker, was sceptical about prospects for recovery in the short term: 'There's no quick fix to the situation,' he said. 'There will be two to three years of steady balance-sheet repair before things get better.' Other economists are even more pessimistic, predicting that the housing market may not recover for a decade.
Savills to cull jobs as house deals slump
High-end estate agent has seen sales volume halve
Sunday, 24 August 2008
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