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Countrywide boss slams Government over housing policies

Friday 27th April 2012
Written by Rosalind Renshaw

Countrywide, the UK’s largest estate agent and mortgage broking network, has announced its strongest Q1 financial results since the market collapsed in 2007 – and simultaneously torn into the Government over its ‘ineffective’ housing policies.

The group said that ‘at best’, the lending market this year would be flat, and it criticised ‘lack of effective government action in supporting the residential housing market’.

Grenville Turner, chief executive of Countrywide, reported an 11% rise in house sales  in the first quarter of this year compared with last, but said conditions remained unpredictable.

He said: “We are currently at a crossroad for home ownership.

“With the market operating at half the long-term average, we call on the Government to take effective action to boost the residential housing market, as the risk of a further drop is increasing.”

Turner said: “We are also aware that as the year progresses, there are other factors at play which may cause short-term disruption such as increases in Stamp Duty on property sales, the Olympics, Euro 2012 and the Diamond Jubilee.

“Additionally, widespread predictions indicate that the mortgage lending market for 2012 will be flat at best, and if the banks continue to restrict their lending, there may be longer-term implications.
 
“Mortgage inaccessibility and mortgage affordability remain the biggest hurdles for home movers and our recent research with YouGov confirms this view from the market, with nearly half (45%) of 18 to 34-year-olds citing deposit affordability as the biggest barrier to buying a property.”
 
He went on: “Despite external factors, significant financial and operational progress will continue across all parts of the Group, coupled with strong cash generation and investment when the appropriate business case is made.

“Although, the timing of a significant market recovery remains unpredictable, we will continue to invest and lay the foundations to capitalise on future valuable opportunities, supported as always by award-winning teams, innovative marketing campaigns and a strong online presence.”

Countrywide’s total income was over £122m in the first three months of this year, up 15%.

Countrywide estate agents exchanged on 13,134 house sales (up from 11,789 for the same quarter last year). Its Hamptons division exchanged on 690, up from 578.

Estate agency contributed nearly £50m to group turnover, and its lettings business contributed nearly £22m. The Hamptons business contributed £5.5m.

Countrywide’s mortgage business sold 13,127 mortgages worth £1.7bn in the first quarter of this year, compared with £0.8bn in the first quarter last year. It also said that it expects its buy-to-let business to rise.

(18) Comments

Added by Lawrence on 2012-04-29 15:13:14

“Mortgage inaccessibility and mortgage affordability remain the biggest hurdles... deposit affordability as the biggest barrier to buying a property.”

Symptoms, not cause (house prices).

House prices are double what they were 10 years ago and half as many people are buying... Suggests there's only a fixed amount of mortgage debt the public can take on.
Added by monkey tennis on 2012-04-28 21:27:46

All businesses have cycles. Just like tesco
Has peaked and hit saturation point, the same can be said for countrywide, no further growth without favours from government,......what a depressing predicament.
Added by The Property Con on 2012-04-28 19:55:34

Some agents just don't get it. The boom was instigated by banks to help banks not estate agents.

Prices are now out of the reach of lots of people but bankers are raking in fortunes in mortgage interest.

The last thing agents want is a return to reckless lending by banks because it will lead to even less people being able to buy in the future.

What we need is a period of tight lending and prices back to 3 times income then we can start again and have a functioning housing market and an economy where people have disposable income to spend.

We only want one government policy and that is to build more houses so there is more stock to sell.
Added by Goldbug on 2012-04-28 17:22:22

What is it with Britain? Every situation has an idiot calling for government intervention.The housing bubble was caused by government and now their policies are preventing the price correction that is obviously needed. When has government ever tackled a problem without either making it worse or caused half a dozen other, worse, problems?
Added by The Property Con on 2012-04-28 14:02:39

Why not go back to the good old days of when lots of houses sold because lots more people could afford to buy them.

1% of 5 sales at £200k = £10k
1% of 20 sales at £150k = £30k

Banks profit from the mortgage interest on a property every day but estate agents only profit when the property is sold. Banks want high prices but estate agents are better off with lower prices and more churn.

www.thepropertycon.co.uk
Added by Brit1234 on 2012-04-27 20:30:32

RE"mortgage affordability remain the biggest hurdle"

But we have the lowest interest rates in history, so what does that leave? Oh yes house prices are far too high. I wonder why that is?

The solution then is for Grenville Turner to get his estate agents to undervalue properties, problem solved. ;)

Added by Orchard on 2012-04-27 15:55:49

The economy has been on zero interest rate life support for the last 4 years, to keep the housing bubble inflated .... and nationalised some of the biggest lenders thus absorbing their debts - a huge amount of government effort has been put in to stabilise the housing market (and defy gravity). Ungrateful @/{
Added by Happy Chappy on 2012-04-27 14:00:53

Jonnie....the Q1 results were no doubt improved by the stamp duty rush. He knows the next few months are going to tough, which is why he is lobbying. Unfortunately for EA's I dont think it will be enough to change the lending market (a good thing IMO)

Note: I deliberately did not say improve the market, as this expression is only based on an individuals perception.

Added by wardy on 2012-04-27 13:35:06

I have to admit Rant that this is a bit rich coming from the countrywide mob. They are their own worst enemies.
Old dip stick down below missed an opportunity there didn’t he.
Added by Jonnie on 2012-04-27 13:30:43

I dunno,

This Grenville bloke, head of the biggest EA group in the country, 1200 odd offices, operates in all sectors, employs thousands of people, accountable to shareholders and managing a business that has seen its market pretty much cut in half in the last 5 years but still making money and the cheeky so and so speaks out against lack of support from the government for the house market

How very dare he? It’s an outrage, he should be supporting the HPC guys and being negative all the time and, and……………give up trying to improve the market, its not his place to say such things, the scoundrel!!

Jonnie
Added by rantnrave on 2012-04-27 13:19:09

Can I repectfully suggest that Mr. Turner does not waste any money on an overseas safari. He is clearly poor at spotting large mammals, such as an elephant, even at close vicinity.

And what if the government's response to his plea is "EAs should stop overvaluing property in order to win instructions"?
Added by wardy on 2012-04-27 11:11:35

Happy,
Take 40% of that off for remortgages.
Added by Happy Chappy on 2012-04-27 10:47:41

So we know that house prices and volume have less correllation to supply and demand....and more to supply of credit / affordability and demand.

The banks are still coming under pressure to pass stress tests and increase liquidity (IMO quite rightly so who wants more bailouts)..........which maifests itself via increasing interest rates, (including to the New buy scheme).

So I dont think the lobbying by the EA industry for returns to former lending practises is going to work.

My prognosis for the market in the short to medium term more stagnatation in the prices and low volumes

Also Note : Countrywide estate agents exchanged on 13,134 house sales and Countrywide’s mortgage business sold 13,127 mortgages....the pressurised complete sale approach appears to be working for them
Added by michael on 2012-04-27 10:29:41

And what about the Community Infrastructure Levy tax now wheedling its way in? In my area (Somerset) it wil tax developers of new homes at £150 per m2 = close to £20k tak on an average new home. Who must eventually pay? The buyer of course .... but with mortgages tight where will they get the extra dosh?

Don't worry me as I virtually only sell used homes, which will then look better value but seems an ill thought out tax.
Added by Mr Brightmove on 2012-04-27 10:25:02

No he hasn't.
Added by wardy on 2012-04-27 09:17:16

Lets play spot the troll. I'll give you an idea, he's already posted.
Added by JamesSE1 on 2012-04-27 08:48:15

Excellent comments from GT
Added by Realising Reality on 2012-04-27 08:42:34

Well, I agree with Countrywide. The Government's housing market policies ARE a non-event.
Improvements are at: http://t.co/65EXJlC

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