A decline in the number of house sales over the coming year could have a serious knock-on effect for businesses, the Royal Institution of Chartered Surveyors (Rics) has warned.
With house sale transactions predicted to fall by as much as 40 per cent in the coming months, Rics said that there could be a corresponding 8 per cent slide in high street spending.
House sales have been hit by the reluctance of banks and building societies, concerned at the effects of the credit crunch, to sanction as many loans as in the past.
This, in turn, is limiting the level of activity in the property market. With fewer house moves going through, so spending on home furnishings and white goods could slip significantly.
So far, year-on-year, house sales have dropped by 31.7 per cent.
Simon Rubinsohn, chief economist at Rics, said: “The second half of 2008 will prove a difficult period for the housing market. Money looks set to remain tight and many will continue to find that access to the market is restricted by cautious lenders.”
Mr Rubinsohn continued: “It is very worrying that property transactions could fall by as much as 40 per cent this year. This could have important ramifications for the wider economy, not only hitting the property industry directly but also impacting on a broad range of related sectors, whether that is the high-street purveyors of home furnishings and white goods or financial intermediaries involved in providing mortgage advice.”
However, Rics said that it did not believe that house prices would follow the same rate of decline, forecasting a fall of only 5 per cent this year.
Date:19 May 2008
|
