According to the Royal Institute of Chartered Surveyors’ regular survey, nearly 80% more of its members reported a fall rather than a rise in house prices during March. That’s the gloomiest figure it’s ever recorded, and it’s been doing the survey since 1978 – even in 1990, when the economy was about to go into recession, our surveyors were chirpier than they are at the moment. RICS blamed the impact of the credit crunch on mortgage lenders, and suggested that the next six months is crucial for homeowners in deciding whether the world as we know it comes to an end (or something).
To be fair to RICS, it’s not exactly the only organisation telling us what a desperate state we’re in. Last Tuesday mortgage lender Halifax reported a 2.5% drop in house prices, the biggest since Black Wednesday. The government’s own figures (which are based on sales, so run a month behind everyone else) confirm that prices fell in February. And the Council of Mortgage Lenders reckon there'll be half as much new lending this year as last year.
Meanwhile there’s no sign of the general gloom in the financial services sector subsidising: yesterday US bank Wachovia became the latest to announce a huge emergency fund-raising ($7bn this time), while other Wall Street giants are apparently trying to flog some of their dodgy loan books at a discount to various private equity firms.
On the other hand, we can’t help feeling that one of the reasons for the dismal sentiment in the housing market is that we’re being constantly besieged by people telling us how bad everything is. How is anyone going to be anything less than horribly pessimistic when everyone’s telling us that our houses will be worth less than a bag of chips by this time next year?
The government certainly thinks we're better off than we were in the early 1990s - the evidence appears to suggest that demand for housing is still there, but that lots of would-be buyers just can't get a mortgage. And Gordon Brown seems to be running out of patience; apparently he thinks some of the banks reluctant to lend money are just taking advantage of the chaos to boost their margins. The beleaguered PM has pumped another £15bn into the money markets today, but if that doesn’t work – and it hasn’t so far – he’ll probably start putting some serious pressure on them to start passing on these interest rate cuts to their customers, in a desperate bid to get the market moving again.
After all, if he can't get us out of this mess, he’ll probably be out of a job before too long...