AVERAGE house prices in Britain are now 10.5 per cent lower than they were a year ago, according to figures published yesterday by Nationwide, one of the country’s biggest mortgage lenders.
This is the largest drop since the last collapse of the housing market in 1990. House prices have dropped continuously for the past 10 months and the average price of a house is £164,650, the same price as at the beginning of 2006 and £19,000 lower than a year ago.
Nationwide’s figures were published only a day after Taylor Wimpey, the major house-building construction company, announced huge losses of £1.54bn in the first six months of 2008, as a result of the slashing of the price of its land holdings and a drop in house sales. More than 900 jobs are to be axed.
This announcement followed that of Bovis Homes at the beginning of the week. Its profits slumped by 84 per cent for the first six months of the year compared with 2007, from £58m to £9.5m. It is to cut its workforce by 400.
The drop in house prices and falling sales are a result of the so-called ‘credit crunch’, growing joblessness and inflation.
Total lending (£24.8bn) was 27 per cent lower in July than a year ago and mortgage approvals were down 65 per cent on 2007.
There is growing unemployment. Tens of thousands are losing their jobs in construction and the Trades Union Congress has reported that 3.3m workers fear they will not have a job in a year’s time.
The decline in disposable incomes as a result of rocketing energy and food prices, up 28 and 25 per cent, is making it more difficult for young people to get a deposit, or keep up mortgage repayments.
So far this year, more than 18,000 home repossessions have taken place as a result of defaults on mortgage payments.
For the past 20 years, ever since the Thatcher Tory government began the privatisation of council housing and stopped council’s building new homes, policies continued by the Blair and Brown governments, it has been almost impossible for workers to get council housing.
A new generation of workers have been forced into the private property market in order to get a place to live. They are either paying rent to profiteering private landlords, or taking out a mortgage loan for houses and flats, the prices of which have been inflated many times over by speculation in the property market.
Now this speculative property bubble has burst dramatically, saddling millions of people with huge debts and facing repossessions.
Talk of a stamp duty ‘holiday’ or the possibility of interest rate cuts, from some Labour MPs, is like turning up to a motorway crash with a sticking plaster.
Workers in the construction trade unions, many of whom are losing their jobs, must ensure that their unions take the lead and adopt a programme of action to save jobs and build homes.
Millions of working-class families are being hit by the housing crisis, so construction unions can mobilise the whole trade union movement in this fight and will get an opportunity to do so at next month’s Trades Union Congress conference.
Since banks and building societies are refusing to provide mortgages and the major construction companies are cutting house building and jobs, they must be nationalised, without compensation to shareholders.
This policy will provide both the funds and the capacity for public works, particularly a crash programme of council house building, to provide homes for the homeless, overcrowded families and youth looking for their first flat.
Everyone knows that Prime Minister Gordon Brown is a servant of the the bankers and big business. His government will sacrifice anything, including the jobs, living standards and homes of the working class, to maintain the bankrupt capitalist system.
So the fight by the trade union movement, for a programme of action to defend jobs and provide decent homes for all, will require mass industrial and political action to remove the Brown government and replace it with a workers’ government that will carry out socialist policies.
