UK Market Comment - February 2009
Get honest and up-to-date comment on the property market straight from the experts, with Winkworth Market Comments. We select key spokespeople to provide an insight into their local property market and get their predictions for the forthcoming months.
We have seen renewed activity in the first couple of months of 2009 as those
who can attain finance look to take advantage of price reductions of up to
25% from 2008.
This has been led by the central London market where foreign buyers are
taking advantage of the weakened Pound,which provides a further 20 - 30%
discount on their already discounted property purchase. With this discount on
currency alone, popular markets,such as Notting Hill, have become more
accessible to international buyers, the Pound has not dropped below 1.4
against the Dollar since 1985. Whilst Sterling remains weak,we will continue
to see more international buyers and larger funds entering the London
housingmarket, increasing the number of sales being agreed in the latter half
of 2009.
However,we are still seeing themajority of UK buyers constrained by finance,
and this continues to be the overriding factor in the property market at the
start of 2009. Whilst this remains the case,we will not see any price
increases, and it remains a priority that credit is freed up. In particular,whilst
standard variable rates are reducing, fixed rates remain high and so this is
preventing people moving mortgages and therefore properties.
In general economic terms, there is little doubt that more difficult times are
ahead, but there is a strong argument to say that the Notting Hill sales
market is likely to recover sooner than the broader economic climate might
suggest. Notting Hill prices reacted very quickly to the changing environment
and, after over 16 months of falling, are now more than 30% lower. This
means prices here have already made their way through the majority of the
widely anticipated peak to trough drop.
The New Year began with a flurry of activity in St John’sWood,with very
encouraging numbers of new applicant registrations. There has also been a
significant increase in viewings,offers and sales agreed. Hopefully this
level of activity will continue throughout the year.
We have seen registrations of new buyers increase by about 150% this year,
compared to any time in the last six months or so. This is a really positive sign
and buyers seem a lot more bullish than they were last year.
So far this year we have had a large increase in the number of enquiries and
registrations from buyers and sellers alike. I think sellers are now coming
round to the idea that the market has changed,mainly because agents are
being more consistent in their pitches and prices are balancing out. Buyers
are re-appearing, conscious that there are bargains to be had and better
mortgage rates now available. I believe that if the Stamp Duty threshold was
increased to £250,000 that would really help bolster the market, here in East
London.
Here in Highgate,we've seen a gentle increase in sales enquiries so far this
year, although some offers received are at considerably less than asking prices.
Curiously, there is still a shortage of property for sale. In terms of rental
properties, rental values appear to be holding as demand meets supply.
2009 started on a much more positive note than 2008 finished on.Most of
our sellers have realised that there is a need to be more flexible in the price
they are willing to accept for their property,and this in turn has resulted in
many more sales being agreed. Buyers have also recognised that, by putting
forward realistic offers,they aremore likely to get the property they want.
This has resulted in the market being much better balanced. People trading
up know that the price gap between what they want to sell and hope to buy
is probably smaller now than it ever will be again.
In January,we had twice as many applicants than in the three previous
months last year. In terms of viewings, there was also a sharp increase with a
206% increase in January 2009 fromDecember 2008. On the whole, sellers
are being more realistic,which is resulting in more people buying. This
month,we even had a 'best and final' situation,with two people bidding on a
two bedroomf lat. The flat sold for in excess of its asking price. People are
now seeing the value in the market,as prices have come down and
affordability is increasing.
The start of the year has seen a continuation of increased interest from
buyers,which started in November 2008. Viewing levels have also increased
and this is now translating into a greater number of offers being made and
sales agreed.
The first two months of the year have shown an increase in demand;we
have agreed more sales in six weeks than we did in the two months prior.
There has been an increase in viewings, and in particular, in second viewings.
Buyers are accepting that the bottom of the market is not too far away, and
those buying for the long term realise that there are good opportunities to be
had.
During January and February this year,we have seen a significant increase in
the levels of viewings and improved levels of agreed sales. Coupled with this,
sellers are finally becoming more realistic which is, in turn, helping to increase
the number of agreed sales.
Since Christmas,we have seen a huge difference in the volume of business, at
all levels. In January,we had an increase in applicants and an unprecedented
amount of viewings (over 400). Sales are better than they have been for six
months.We have a number of properties that have sold for more than the
asking price and we are back-to-back with market appraisals.
In the more cosmopolitan areas of France, such as the Côte d'Azur, the
market, although quiet, is nevertheless ticking over with continuing interest
from the French, Scandinavians and other Euro-zone nationalities. In Northern
and Western France particularly, there have been reports of price reductions of
up to 30% and this is certainly the case where British vendors are relocating
back to the United Kingdom as these reductions are compensated by an
equivalent percentage fall in the value of Sterling against the Euro.
The market in Portugal has slowed in the last five months as British
purchasers struggle, in particular with the Sterling-Euro exchange rate. Prices
have dropped by around 14%, however vendors here are reluctant to accept
the reductions in price and, as they usually have high equity, they are
prepared to sit it out and are not under pressure to sell. This in turn, has
caused a reduction in the volume of stock. Prices therefore shouldn't reduce
as much as they have in the UK.
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