Plunge in house prices predicted

Estate agent Peter Alan announced on Thursday it was cutting 25 jobs

House prices in Wales will fall dramatically over the next year and unemployment will continue rising, according to research for BBC Wales.

The credit crunch is likely to hit the Welsh housing market badly with house prices predicted to fall 38% from their peak just over a year ago.

The average number of people out of work by the end of this year is also expected to be 10% higher than in 2007.

The research was by analysts and consultants for BBC Wales Dragon's Eye.

Experts are also predicting a tough 12 months for businesses after seven of the Welsh companies listed on the stock exchange issued profit warnings, four more than last year.

I'm just waiting to see what the lenders start to do with the money that's been injected into the system Ray Newton, Durbins Legal Estates

Economic consultants Capital Economics told the programme its forecast for the housing market had to be revised because of the scale of the current financial crisis.

It predicted UK house prices would fall 35% by the end of next year from their peak in 2007 and the Welsh housing market would fare even worse.

Ray Newton, branch manager of Cynon Valley-based estate agents Durbins Legal Estates, said it was the toughest time he had ever known and the next few months could be "devastating".

"I would say over the last 12 months [there's been] probably a 15% drop [in house prices]," he said.

"I'm just waiting to see what the lenders start to do with the money that's been injected into the system.

"As soon as they start lending again we will see some movement and hopefully that will be soon."

Wales' largest estate agent Peter Alan announced on Thursday it was cutting 25 jobs.

Two branches, Aberdare and Carmarthen, will close by Christmas with 31 redundancies but six new positions will be created in Merthyr Tydfil and Llanelli.

Its parent company, the Principality Building Society is blaming the credit crunch for the cuts.

Economic analysts Cambridge Econometrics estimated the average number of people claiming jobseekers' allowance in Wales by the end of this year would be 45,400, compared to 41,000 last year, an increase of 10%.

A sharp rise in profit warnings among Welsh companies listed on the stock exchange, a key indicator of companies' financial health, suggested the economic crisis was already hurting the Welsh business sector.

Companies feeling the pinch include Aberdare-based Walters Group which is involved in a range of activities including civil engineering, plant hire and demolition work.

Group director Huw Richards said: "We've seen, probably, over the last six to nine months a 25-30% decrease in activity.

"Unemployment levels have followed that and our workforce is slowly decreasing.

"Throughout the group we've traditionally been employing something like 400 people and about 100 regular sub-contractors and we're back to a core of 300 of our own people and all the sub-contractors are laid off."

He said future prospects did not look good and there was "no confidence out there".