Leading building societies poured more gloom on the housing market yesterday when one said it was retreating from estate agency, another promised tougher action on those who could not pay mortgages, and a third said confidence was at a two-year low.
In a separate statement, Hambro Countrywide revealed a pounds 10m leap in losses from its 757-strong estate agency chain, which pushed the company to a half-year loss of almost pounds 6m. Hambro Countrywide passed its interim dividend and the shares fell 1.5p to 27p.
Bristol & West said it was closing 25 of its Hamptons estate agencies, putting 135 jobs at risk. Bradford & Bingley became one of the first mortgage lenders to acknowledge the cost of rising repossessions by more than doubling its half-year provisions against bad debts. The move ends a three-year trend when the number of repossessions fell.
Britannia Building Society added its own bad news with its latest homeowners' confidence monitor, which showed that 51 per cent of homeowners were "not confident at all" of a recovery in the housing market over the next 12 months, the gloomiest result since the survey began in 1993.
John Burke, chief executive of Bristol & West, said the society was considering the best way to rid itself of 25 unprofitable Hamptons branches, through either closure or sale. "We are in consultation with the staff at the moment. We are looking to redeploy as many of the 135 staff as possible within the group," he said.
Mr Burke insisted that the remaining 47 Hamptons branches were profitable. However, when asked whether he had considered withdrawing from estate agencies completely, as both Abbey National and Nationwide have done, he replied: "It has to be an option."
Bristol & West's pre-tax profit for the six months to 30 June 1995 rose pounds 1.3m to pounds 34.3m. Last time's figures were hit by the pounds 7m cost of closing other estate agency branches. The society bought Hamptons in 1990 from British & Commonwealth.
Rob Thomas, an analyst with UBS, said the closures were "probably a fairly welcome change for a society like them. They have to concentrate on their main business. I don't think in the long term they will regret it."
Colin Finch, deputy chairman of Hambro Countrywide, said the company made an pounds 8m trading loss in the first three months of this year, but had traded profitably in June and July. He declined to speculate when the company, 52 per cent owned by Hambros Bank, might return to the black, but asserted that "we live to fight another day."
Mr Finch said Hambro had had problems integrating the 300 agencies it bought from Nationwide last November, in particular the need to motivate demoralised staff.
The deputy chairman said Hambro sold 31,136 houses in the half year to 30 June 1995 - a fall of 6.2 per cent compared with a reported drop of 15 per cent for the industry.
Christopher Sporborg, Hambro Countrywide's chairman, added that the housing market was weak "and in the short term, we foresee little market improvement. We are confident that in the medium term the investment we have made in expanding our network, which has affected our results in the first half, will be justified."
Phillip Gibbs, analyst at BZW, said this showed Hambro had "performed better than the industry average - but the industry continues to suffer a particularly sharp decline in volumes. There is a bit of a commission war going on out there."
Bradford & Bingley became one of the first to acknowledge the resurgence in repossessions yesterday by increasing its bad debt provisions from pounds 4.4m in the last half of 1994 to pounds 10.2m in the first six months of this year. This compared with pounds 8.4m for the first six months of 1994.
John Wriglesworth, senior manager at Bradford & Bingley, said: "Provisions are bumping along the bottom at the moment." He did not expect them to return to the very high levels of four years ago.
Britannia's survey of home owners' confidence showed that the number surveyed who were confident of a recovery remained flat at 40 per cent, against 39 per cent in February.Reuse content