It’s a brave man who calls the bottom of the housing market and an even braver one who calls the bottom of wider economic crisis. Yesterday Bank of England governor Mervyn King was doing neither of these things, going out of his way to play down any talk of green shoots and lower expectations of a quick recovery.
The role of the housing market in fuelling the economy cannot be understated – it was the collapse of the sub-prime market in the US that started the wider global economic crash. This then filtered through to the UK in the form of the credit crunch and in an instant the housing and construction sectors ground to a halt hitting every sector of the economy as a result.
Builders got laid off, they didn’t buy petrol to drive around in vans shouting at women, they didn’t eat large breakfasts while reading the Sun and most importantly they didn’t build anything. According to ONS statistics published in the Guardian this week it’s been planners, surveyors and architects that have born the brunt of this.
Figures on benefit claimants across the UK show, there was a 960% in the number of architects claiming benefits (1,590 people), an 854% rise in Architectural technologists/town planning technicians (1,145 people), a 679% rise in surveyors (1,130 people) and a 488% rise in town planners (235 people). The number of vets claiming benefits rose 350% (45 people).
But there is room some for optimism. In the construction sector this week, shares have risen on the back of a series of optimistic announcements. Redrow, revealed it is to restart work on several mothballed sites while Galiford Try announced it expects results to be in line with expectations. Confidence too appears to be rising with the house-buying public. A survey by property website Rightmove revealed that 70% of respondents believe now is a good time to buy while six out of ten believe house prices will remain steady over the next 12 months. This is backed up by data from RICS which shows buyer interest growing across the UK.
Of course even if this does amount to a recovery of sorts, it will take a long time to filter through to the wider economy, unemployment continues to grow, 250,000 people lost their jobs across the UK since January – the steepest rate since 1981, but a revived housing market will go some way to slowing the trend. A recovery looks a long way off but we could be heading in the right direction.
*Update* Housebuilding up 13% in quarter one
Filed under: Uncategorized | Tagged: credit crunch, economy, housing market, job losses
Never thought I’d see so many architects signing on the dole! Are there job centres in middle class areas?
Don’t confuse the stock market with the real world. And don’t confuse house price recovery with land price recovery. (Importnat because land prices pay S106). Last recession around land prices took twice as long to recover.
Good point Mick. I suppose I was talking more about confidence returning, which would be the first step towards any recovery.