Tackling problems in the housing market
October 2008

(RICS' 15-point plan to tackle the housing market)

The current situation
Dealing with the current housing market downturn requires significant and decisive action from the Government whose attempts to address the problems facing the market up to now have been limited.

Housing transactions have fallen by over 60% during the last year, in line with other serious economic problems.

The sharp reduction in mortgage lending has a resulted in a vast accumulation in the stock of unsold property on estate agents books (33% up on year ago levels) and this has inevitably put downward pressure on house prices.

Taking an average of the key Nationwide and Halifax indices, house prices are down by 9.5% on year ago levels in June and by 9.8% from their peak.

Whilst falling prices is not in itself necessarily a bad thing, a collapse in transaction activity has much more severe consequences.

Spending on consumer durables is set to fall sharply next year whilst construction output is already plummeting impacting both jobs and ancillary services.

RICS also expects the number of repossessions to rise by over 50% from 2007 levels during 2008 to over 45,000.

Indeed many economic indicators are hitting lows not seen since the housing market downturn of the early 1990s.

Consumer confidence has plummeted with surveys of the retail sector also painting an equally bleak picture.

The time to act is now
To encourage the Government to take action, RICS has put together a practical package of measures that will help address the downturn in the property market, help people who want to own a home and improve the home buying, selling and renting experience for consumers.

These issues will not be resolved by a series of small individual measures but must instead be dealt with by looking at the system as a whole.

It is essential that the Government takes this opportunity to kick start the housing market and at the same time introduce long term reform that will benefit all those involved in property including renters, letters, buyers and sellers.

The latest RICS study into housing accessibility for Q2 2008 revealed that first time buyers have seen access to the market deteriorate in 2008.

A couple on lower quartile earnings will need to save over 100% of combined annual take home pay in order access the market. With loan to value ratios likely to be scaled back further into 2009, first time buyers will find it increasingly more difficult to access the market.

Measures to increase the supply of rental properties could help ease the sharp pick up in rental growth which has accompanied the slowdown in the owner occupier market.

RICS believe that a combination of measures must be put in place looking at:

• fiscal and financial issues;
• new models for home ownership;
• availability and affordability of homes;
• consumer information;
• regulation and standards.

The package should not just look at immediate issues but must also establish a more efficient, sustainable property market with more information and better protection for consumers.  

RICS supports a 15-point plan to tackle issues in the housing market. Access this plan from the PDF Downloads panel.

 RICS has written to the Chancellor and Housing Minister to urge action on this broad range of fronts.

We will continue to call for better consultation with the industry and for a joined-up approach by government on residential property and housing issues.

Contact: James Rowlands, Policy Officer jrowlands@rics.org