Credit crunch wipes 23% off house sales in October

By Joey Gardiner and Joey Gardiner Joey Gardiner2007-12-07T00:00:00+00:00

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Number of homes changing hands falls from 661 a day in 2006 to 510 this year

House sales fell by nearly a quarter in October on the previous year, according to figures collated by the NHBC (see below). The statistics show the extent of the slowdown in the housing market since the credit crunch and the run on Northern Rock in September.

The NHBC found that an average of 510 homes were sold each day in October, compared with 661 in the same month in 2006, representing a decline of 23%. By contrast, the year-on-year comparison in August showed a decline of only 1% (see graph).

The news follows a series of profit warnings from housebuilders such as Barratt, Taylor Wimpey and Bovis Homes, all of which have experienced falling sales.

They cited a lack of consumer confidence following the problems at Northern Rock and the continuing fallout from the sub-prime loans scandal in the US (see page 18 for a specially extended Sharewatch on the slide in housebuilders’ stock).

So far, falling sales have yet to have an impact on housing starts or completions. Completions in October were 16,021, 11% up on the previous year, although lower than their high of 21,851 in June.

Roger Humber, the chief executive of the House Builders Association, said firms would be analysing whether to reduce construction volumes, with the developments of apartments particularly vulnerable.

He said: “I’d not be at all surprised if we see a number of large schemes mothballed until the market comes back.”

David Pretty, the former chief executive of Barratt, now chair of the New Homes Marketing Board, said firms would reduce construction if the market didn’t recover in the spring.

He said: “All housebuilders will be reviewing their options ahead of the new year, although I still think the most likely option is a soft landing.”

• Developers wait almost three years on average to receive planning permission for large housing schemes in London, according to London Development Research.

The report found it took an average of 35.4 months for schemes of more than 150 homes to get consent.