Three buckets of cold water this morning for hopes of a housing market upturn: downbeat results from Britain’s biggest private landlord; the lowest US housing starts for 50 years; and predictions of years of stagnation in a key regeneration area.
Grainger, the largest quoted residential property owner, posted a pre-tax loss of £143m in the six months to the end of March thanks to factors that are becoming familiar to some housing associations: mark to market adjustments on financial instruments, property valuation deficits and impairment provisions. It also deferred its half-year dividend but said it hoped to pay out at the end of the year
Acting chief executive Andrew Cunningham told Reuters: ‘If market conditions continue to improve, and they have improved somewhat over the last six weeks, then I think we will be pretty confident of announcing a dividend.’
However, with the housing derivatives market still predicting a potential 20% fall in house prices by the end of 2010, that remains an if rather than a when. ‘It’s still too early to say that the market is on an upward trend because prices are still falling,’ he said. ‘We still need to see sustained growth and stability in the housing market, and a recovery in mortgage financing.’
The fall in US housing starts in April - the ninth fall in the last 10 months - was seen as particularly sobering news since analysts had expected them to rise. Prices of existing homes are also still falling across the Atlantic.
Given that the world financial crisis started in the US housing market, a recovery would be seen as a strong indicator of recovery to come here. The fact that prices and starts are still falling suggests it will be a while yet.
And, as Inside Housing reports, there was also a sobering message today about the prospects for regeneration in the Thames Gateway. Peter Andrews, chief executive of the development corporation, told an all-party group of MPs that its capacity to deliver would be ‘extremely limited for the next five to 10 years’.
The reason, he said, was the planned volume of high-density housing, which was dependent on a business model relying on pre-agreed sales based on the assumption that property prices would rise that was ‘effectively broken with no hope of replacement’.
The worst may be over for the housing market thanks to emergency economic surgery from the Treasury and Bank of England but with mounting job losses yet to come that does not mean it will return to ‘normal’ any time soon.
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