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Simon Thornton

BRITAIN'S economy, according to many experts, is heading for a severe downturn. At the forefront of the financial disaster is the once soaring housing market.

About 150 estate agent branches are now closing every week in the UK, according to research. Wharfedale Newspapers have been attempting to discover what local repercussions the so-called credit crunch has been responsible for.

Jeremy Leaf, from the Royal Institute of Chartered Surveyors, said many estate agents were closing because people eager to move could not get a mortgage.

And he said other businesses linked to the housing market, like removal and DIY companies, were also suffering.

The number of properties changing hands has fallen sharply in the past 12 months. And Bank of England figures show that the number of new mortgages approved in March was the lowest since records began in 1999.

Mr Leaf acknowledged that the housing market bubble in the past five years may have led to a surge in the number of estate agencies.

But he said: "Many estate agents, contrary to popular belief, do actually add value to a transaction, and they are useful to buyers and sellers.

"Some people won't have particular sympathy, but it's one of the businesses that is dependent on the housing market for its trade, and there's going to be a knock-on effect to DIY companies, removal companies and those of us in the housing business."

James Eddison

The UK's largest estate agency group Countrywide said it had closed 50 branches this year. The rate of closures has accelerated since the start of the year and now stands at about 150 a week nationwide.

Mr Leaf said the current trend could be reversed if more mortgages were approved.

"There is money out there," he said. "But even more creditworthy borrowers are being told that they need a more hefty deposit or they wont be able to get the mortgage they want. "If we could just get some consistency then those that have to move, want to move, would still be able to do so."

The banks have been stung by people, mainly in the USA being given mortgages they couldn't possible afford to pay back successfully.

Ruthless, confidence trickster salesman have reaped in huge bonuses, and profitable business was had by solicitors and estate agents, leaving the banks with massive financial black holes when the new home owners defaulted. As a result, banks across the West have tightened the purse strings and are reluctant to lend as much money as they were prepared to before.

Without access to mortgages, potential home buyers cannot move house, meaning a sharp fall in business for any company that depends for its trade on people wanting to move. Estate agents have been particularly badly hit. Debtwire, an organisation which monitors the health of companies, said the number of estate agency branches had fallen from about 13,000 at the beginning of the year to about 12,000. As a result of the slowdown in business, house prices have also been falling.

We asked estate agents with offices across Wharfedale what the effect of these national trends was on the once buoyant market in Wharfedale.

Patrick McCutcheon, of Dacre, Son and Hartley, said: "It does not surprise me that in some of the more competitive areas that those who set up on the crest of a boom are finding it more challenging - and that it will produce some casualties does not surprise me.

"There has been a price adjustment of seven or eight per cent over the last nine months. Volume of sales is pretty much where we expected it to be this year. The market has just taken a breather and seems to be moving forward.

"Our sales volumes are down on last year but not by very much. There is more stock about and more properties for sale. I would not say we are having a housing crisis - I would say we are going through a period of some adjustment.

"The one million pound plus market seems to be a strong as ever. There has been a slow down but we are not looking at a precipice."

Bill Dale, of Ilkley estate agents Dale Eddison, said: "There has been much media hysteria about the housing market during recent months, and the story has never been far away from the front pages. Whilst we have certainly seen a slowdown in activity, sales have, however, continued at a steady level.

"One of the main difficulties is the lack of new buyers for smaller terrace houses and flats. This has 'knock-on' consequences up the market.

"Mortgage conditions are challenging but there is still finance available for good quality applicants. Anyone thinking the bottom has fallen out of the market just needs to drive down Wellington Road to see that sales remain at a healthy level.

He said that the top of the market remained particularly active with a shortage of quality character homes.

"We have achieved a number of sales in this sector of the market during recent weeks with strong competition between buyers."

Simon Thornton, of Simon Thornton estate agents, said: "The housing market is very much part of the general economy. The LS29 market is dominated by middle to upper income first timers, family and retirement buyers.

"Despite strong employment, disposable income etc, even LS29 has been hit by the credit crunch and recent market uncertainties, such that the numbers of transactions are significantly down and the five per cent gains of 2007 have evaporated. "Local interest and inquiry are buoyant but buyers are sitting on the fence until the right house at the right price appears.

"The sickening cost of a tank of petrol, the supermarket trolley or the gas bill can no longer be shrugged off against the background of increasing personal property wealth, creating a mood of caution likely to delay a return to spiralling house prices despite the widely reported national shortage of family homes. Whilst the background is quite different, we are having to develop the skills learned back in the days of the 90s housing recession and deal with each property and each vendor very much on a one to one continuing basis."

James Eddison, branch manager of William H Brown estate agents, said: "There's a lot of talk about crashes and house prices falling by huge amounts but the reality behind most of these headlines is somewhat less dramatic.

"The reason for this is that everything is compared to the exceptional growth we've had in the last three or four years, when year on year house price rises were regularly topping 15 per cent and houses were selling in days and sometimes even hours.

"With good schools and good transport links, Ilkley is a desirable place to live, even in a slowing market. However there is no doubt that we've had fewer buyers registering in the first quarter of the year compared to the same time in 2007. "As well as this with more properties on the market there is more competition and anything that is overpriced is very difficult to sell.

"Astute sellers realise that a good price will make their property stand out and generate lots of interest. We had a good case last week when we began marketing a property on Friday and sold it within a couple of days.

"So by being a bit more realistic and through working closely with an estate agent who is experienced at managing property chains sellers can achieve a quicker sale without losing out."

4:31pm Thursday 15th May 2008

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