Property slump starts to bite

10:17am Thursday 22nd May 2008

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HOMEOWNERS who have bought new houses in Wyre Forest within the last two years will face negative equity with the slump in the property market, an estate agent has warned.

Over-inflated prices charged by builders on recent new builds are leaving homeowners seeing red, with an average of £30,000 to £40,000 being lopped off the value of typical four and five-bedroomed houses.

Estate agent, Liz Lord, said: "Prices had been absolutely over-heated, especially for our area, which lost a lot of industry and the capacity for high wage packets."

She said the housing market was now going through a levelling out process, during which many people will find their homes are worth less than they paid for them.

Mrs Lord, Kidderminster branch manager of Allan Morris and Guise, said houses built about four years ago would end up about at the same value as their original purchase prices but more recent purchasers would find themselves hit by negative equity.

She warned that people living in older properties, who had bought at very high prices, will also find their homes are not worth as much as they paid for them, as the housing market nationally continues to slide.

"I would estimate that asking prices are down 10 to 15 per cent on the same period last year," she said.

Estate agents and solicitors throughout the district are having to tighten their belts as many report a downturn in business.

Mrs Lord said her company was maintaining a balance between instructions and sales and were confident of "weathering the storm."

However, a part-time administrative post has not been refilled after the employee left and costs such as advertising had been reduced.

Mrs Lord and other estate agents said there were plenty of buyers out there and vendors who took advice and put their homes on the market at realistic prices would sell.

Richard Painter, of Painters Solicitors, confirmed that "less than five" redundancies among solicitors and administrative staff had been made at the firm following a review of the organisation started last autumn.

He said the company employed about 50 people and a secretary had been made redundant as a result of a decline in home conveyancing but he added that the company was now "robust and strong".

Thursfields solicitors practice manager, Rachel Pardoe, said the making of new legal staff appointments had been delayed after the conveyancing side of the business "really dipped" but the downturn had been foreseen and managed.

She said the firm was making the most of its staff, with extra training and added that the decline had been offset by an increase in divorce and probate work.

Tim Elliott, senior partner with Phipps and Pritchard estate agents, acknowledged that trading conditions were tough and had drastically cut advertising but said the company was fortunate in having other income areas, including auctioneering, management and valuations.

Dixons Kidderminster branch manager, Lisa Aston, said: "It is a lot tougher out there at the moment but our five per cent deposit scheme for first-time buyers has been a success. You have to be proactive."

Bagley's estate agents has closed its Worcester Street office in the town and Shipways branch manager, Rob Moore, said there were rumours about small agents facing the prospect of going out of business.

Doolittle and Dalley partner, John Andrews, said the volume of new instructions had slowed down in the last month and blamed the credit crunch and high domestic bills, like heating and petrol, for putting people off wanting to move to bigger properties.

"Generally, the market is quiet," he said, "We run a tight ship here so we will weather the storm.

"We are involved in other things. Those who are 100 per cent reliant on property sales will be hardest hit," adding that he believed the market would start to move again as more new mortgage products came online.

Andrew Grant estate agents reported that despite the difficulties in the housing market it had enjoyed its best week this year, with a 30 new sales across the region, totalling nearly £10 million.