Winkworth Market Comment – Summer 2009

June 29th, 2009

OVERVIEW

Dominic Agace, Managing Director of Winkworth Franchising Ltd
‘Since the start of 2009, activity levels have improved significantly. These will now stay at this level until October 2009, when we would expect to see them reduce again.

‘The ongoing cost and restriction of personal and commercial finance, combined with unemployment figures, will restrict any price growth in 2009.  However, properties in prime locations, such as favored streets in particular areas, may experience price growth this year.  In these cases competition, driven by buyers looking to take advantage of property discounts and low interest rates, will push prices up due to a lack of alternative suitable properties -without price growth properties are being held back from the market.  These properties are an exception to the norm however, and I do not view price growth as a market-wide trend for 2009.

‘In conclusion, there will be greater activity levels in 2009, equating to an average of 10 to 15% more transactions than in 2008.  However, volumes will still be lower than in 2006 and 2007, and I don’t expect volumes to return to 2006/7 levels for several years.  Nevertheless, in this period of Government intervention and low interest rates, there is a great opportunity for those with 20% deposits plus to buy and sell prior to any potential interest rate rises next year, and this is driving much of the demand.’

LONDON

Tom Dogger, Franchisee of Winkworth Knightsbridge & Chelsea
‘Knightsbridge, Chelsea & Belgravia are experiencing an unprecedented increase in enquiries from purchasers looking to buy properties in this prime area of Central London. The majority are based overseas and are taking advantage of the perceived fall in prices since the peak of the market in 2007, plus the weak pound. In many cases, buyers are not dependent on financing and are using cash funds.

‘Although stock availability throughout the spring remained proportionate to the number of applicants looking, we have noted an alarming development in the rapid decline of houses and flats to buy.  For the first time in over 18 months, we have had two instances of gazumping and three sealed bids in the past two weeks. Unless significant numbers of units become available, which is unlikely due to historically low interest rates, on balance over the course of 2009 we anticipate price rises.’

Charles Peerless, Franchisee of Winkworth West End and Clerkenwell
‘Prices in the West End and Clerkenwell stabilised in around March this year.  Since then, we have had an increase in the number of buyers registering.  However, buyers remain fairly cautious both in making offers and in the offers they make.  There is a renewed willingness to buy, as long as a common ground can be found on price.

‘As a result of a very busy past ten weeks, stock levels have decreased here as demand heightens.  Sales agreed often come about after heavy negotiations on price, from buyers and sellers alike.’

Richard Woolf, Franchisee of Winkworth St John’s Wood
‘The spring has heralded a huge and welcome improvement in buyer sentiment, leading to a large number of good quality enquiries and sales.

‘Contract races are back and prices are firm at many price points in the market.  If this rosy scenario continues, prices will probably begin to rise soon, although the trend is unlikely to be even across the board.’

Ian Dickson, Franchisee of Winkworth Hammersmith and Shepherds Bush
‘We started seeing signs of a recovery at the beginning of this year; recent results from various industry reports are, in fact, five months behind and only highlight what we have known for some time.

‘Time and time again, we come across new evidence of prices stabilising.  A recent example is a two bedroom flat that we sold in the peak in July 2007 for £405,000.  The same property came onto the market with us this month and an offer was made of £390,000 – only a 4% reduction from its peak price.  Not everyone is as fortunate as this vendor but people who bought two years ago are not in the depths of despair they thought they would find themselves in with prices recovering as demand outstrips supply.

‘The amount of genuine, good quality enquiries has risen by 50% since the end of last year.  This is particularly true of first-time buyers (with deposits) who have been around in good numbers – first-time buyers are off the endangered species list.’

Arona Sarwar, Franchisee of Winkworth Walthamstow
‘In the rentals market, we have seen an increased availability of rental properties, giving tenants a good choice of stock. This has, in part, come as a result of many former tenants taking advantage of lower property prices and buying for themselves; both first-time buyers and former owners buying larger family properties.  With more rental stock available, competition amongst landlords has seen rents fall by 8-10% on average since the post-Christmas rental boom.

‘In sales, first-time buyers started tentatively returning to the market around Christmas time and this interest has continued. This trend is now filtering through to those relocating out of central London or the provinces into London and others looking to trade up into larger properties.

‘Prices have now steadied and, in some popular areas, may even be starting to increase. In the Village area, prices have strengthened and now stand at perhaps 5%-8% below their summer 2007 peak.

‘Looking to the future, I expect rents to recover in the following months as the availability of rental properties and demand for tenants come back into balance.  The outlook for property prices remains largely dependent on the availability of mortgages and the banks’ lending policies.  Inter-bank lending has increased in pricing and this again may further affect the housing market recovery.’

Stewart Boyd, Manager of Winkworth Willesden Green
‘In Willesden, we are experiencing the highest buyer registration levels since 2007 as the banks’ attitude to lending has changed. Spring was the time for renewed optimism in the market.  The increase in registrations has led to a marked increase in offers and sales agreed.

‘Stamp duty thresholds and properties that require work are still an issue for first-time buyers as large cash deposits are required to secure a home loan.  Where personal circumstances are at the root of a move, there is some good trading being done.  My feeling is that when the upturn does come it will be slow and gradual, rather than the rapid inflation in house prices we have seen in recent years.

‘In lettings, towards the end of the year and the beginning of 2009, many would-be vendors, unable to sell at a price they wanted, changed their minds and decided to rent their properties.  This has brought the market back to an equilibrium.  Overall, landlords may have to look at around a 15% reduction in rent this year compared to the highs of 2008.  There is a lot of good quality rental stock on the market so prospective tenants have a good selection to choose from.’

Calum Mason, Franchisee of Winkworth Crystal Palace
‘This period has been very strong in terms of business.  Buyers are back in good numbers and we have even seen the re-emergence of sealed bids.  There is a really positive feeling amongst buyers and sellers alike.

‘We are now encountering a shortage of stock, which means that popular properties, such as two bedroom garden flats, are selling within a week.  Homes that have been on the market for months are now starting to go under offer for near their asking prices.

‘Another change is the re-emergence of first-time buyers.  Their budgets are not huge, as they are constrained by the size of their deposits, but there is now a steady stream of first-time buyers to our office.  Buy-to-let purchasers have even returned – we had two this month.  They are taking the long-term view, with the eagerly-anticipated East London Line which will give Crystal Palace an underground station.’

OUT OF LONDON

Ryan Jones, Franchisee of Winkworth Market Deeping
‘Winkworth Market Deeping opened at an ideal time, in April this year.  We entered the market at a time when the downturn was on the mend.  Frustrated sellers have turned to our office after their properties have remained on the market for months on end with other agents last year.

‘We are the selling agent for Persimmon’s one-five bedroom developments in Frognall.  In eight weeks we have already had four units reserved.

‘These are truly green shoots that we can work with. Confidence is coming back to the market place; houses are now at affordable levels and are within grasp for first-time buyers who were previously priced out of the market. Cash buyers are also returning to the market after sitting it out until prices levelled out.’

Michelle Lloyd, Franchisee of Winkworth Shoreham
‘For the last few months, there has been a general upturn in valuations.  People are feeling much more confident about the prospect of selling.  There has been a noticeable increase of first-time buyers and second home buyers looking for properties in the £200k – £260k price range. Rentals, however, appear to have slowed down as buyers return to the market and no longer require rental properties.’

Bill Jarvis, Franchisee of Winkworth Winchester
‘We are now into what looks likely to be our third record month in succession, (since opening the office in January 2004), in terms of sales agreed.  After a great April and May, June is shaping up to be another very successful month for Winkworth Winchester.  There is a shortage of supply in Winchester and high demand.  Our office is managing to meet this demand as properties are coming onto the market on the back of selling others.  The properties that are in highest demand are terraced and semi-detached Victorian three-four bedroom houses, as well as detached family houses.  This is a great market to be in if property is priced correctly and buyers are well matched to those properties.’

Martin Thomson, Manager of Winkworth Sleaford
‘This period has seen an increase in the quantity of stock coming onto the market.  Stock coming onto our books ranges from family houses to flats and is mostly fresh to the market.

‘The number of buyers has also increased, by around 10-15% in the last monthalone.  Again, this is across the board and includes families, second home buyers, downsizers and first-time buyers – who are now making a come back.

‘This signals that confidence is growing for buyers and sellers.  Properties are now getting offers for the full asking price; and if not, close to the asking price.  There are no longer buyers trying their luck and making offers that are way off the asking price.

‘This month, I predict the number of offers made will increase by 38% from January this year, and the number of sales agreed should increase by around 33%.  I remain optimistic that this level of activity will continue to the end of this year and beyond.’

Rachel Briggs, Sales Director at Winkworth Sheffield
‘The market in North Sheffield is most definitely showing signs of improvement. We have noticed a significant increase in the number of viewings, offers and sales activity since the start of 2009. I feel confident that we have seen the worst of the downturn in property prices and sales in this area.

‘This year, I predict that property prices will remain stable. With increased interest from first-time buyers, the higher end of the market can now start to move. There are many buyers looking to upsize on their first property, with the return of the first-time buyer they are now able to sell their existing property. When confidence and lending abilities improve for first-time buyers, more people will be in a position to move.’

INTERNATIONAL

David King, Managing Director of Winkworth France
‘France is not as susceptible to the boom/bust culture as the UK and the US.  Although the French do not benefit as much as the British or Americans in boom times, they rarely enter recession as deeply. Thanks to higher state involvement in the economy (particularly taxation) and also a relatively low percentage of property ownership, France is now in a more stable position than the UK and US.  However, that is not to say that France has been left completely unscathed by the ‘global’ recession; since mid-2008 property sales have fallen with price reductions sometimes up to 30%.

‘We have seen an increase in property visits from all nationalities and this is creating an increase in sales. British selling to a Euro-zone clientele and relocating back to the U.K. can afford a 30% reduction on sale price, which means that both parties then benefit from the Sterling/Euro near parity.  Winkworth are confident that 2009 will defy expectations and the impact of recession on the property market will be less serious than predicted.’

Mary Mangan, Director of Winkworth Portugal
‘The market has improved in the past months with an encouraging March, April and May in terms of volumes of properties sold.  Buyers are coming in the main from the Euro-zone and, of particular not, the number of Portuguese buyers has increased during this period.  British vendors who are converting their Euros back to Sterling are enjoying the benefits of the Sterling/Euro exchange rate situation and Euro buyers have seen corresponding value for money.

‘Prices have stabilised during the period and we do not anticipate any further reductions over the summer months as Sterling has gained strength and vendors feel that current pricing reflects the reality of the market.

‘Overall, with our appealing climate, continued investment by the Portuguese Government and developers in world class infrastructure and ease of access from all over Europe, Scandinavia and Russia, we are optimistic that the market will continue to show further signs of improvement over the coming months.’

Posted in Franchising, Industry-related News, International Market Comment

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