UK Residential Sales Summary
Early indicators show demand remains strong pointing towards a brighter year ahead.
Our sales offices have started the year well and the market should be favourable for those looking to sell in the coming months.
UK Residential Lettings Summary
Applicant numbers show seasonal increase but the real story is the shortage of stock
Stock continues to be the biggest challenge for the lettings market. Whilst we saw a slight increase on the previous month for new instructions coming to the market, the stock levels at the end of January were 57% lower than the previous year. This has however caused rental prices to stabilise across most areas. For the last three successive quarters lettings properties have slowly gained in value, with Q4-2009 showing the strongest gain of the year.
International Markets
The New Year market brought many new buyers to the International market
The start of a new year always carries with it some trepidation, and given the economic difficulties we have all experienced, we are looking for a bright start in 2010.
Most regional marketdssafasds in the UK are already seeing positive improvements on last year and this sentiment, and general confidence is now feeding its way through to the International market.
January was our strongest month for quite some time so it’s encouraging to see the New Year off to a good start. Once again, it’s the developing markets that seem most popular with holiday home buyers and investors, with numerous sales agreed in both Morocco and India.
As an example of the fast moving market in the first month of the year, Hamptons International launched the marketing of Villa Jako, the former home of fashion designer Karl Lagerfeld in Hamburg. Enquiries are already being received from across Europe and the Americas from Connecticut, USA through London and locally in Hamburg.
View Villa Jacko property details
Developments, Land & New Homes
Off-plan remains challenging but completed new build stock remains popular
Despite transport and weather problems at the beginning of the year activity has resumed very early into 2010. Strong interest is still evident from UK buyers in the mid-market, with valuation issues becoming less of a factor, more cash deposits and a renewed amount of confidence demonstrated in the market.
In recent weeks the high end market has seen renewed activity however reduced levels of stock remains an issue. The launch of schemes such as the Lancasters and One Hyde Park this year will however go some way to addressing this concern.
There have been consistent levels of activity in terms of new applicants across the board and whilst the sale of off-plan stock remains challenging, completed new build stock remains popular.
The premiums that once existed at the entry and mid-pricing levels for new development stock have been eroded, and as such, there are opportunities for purchasers originally looking in the second hand market to pick up a new property at a price in-line with existing stock.
The availability of new development stock and more specifically completed new development stock is however still restricted due to the lack of construction starts in 2009. Long term the outlook remains good with many of the larger house builders back in the market for land opportunities, the knock on effect of this being an increasing amount of completed stock for 2011 and beyond.
Mortgages
Steady steps to recovery in early 2010
The mortgage market’s steady steps back to recovery have continued after the festive break and the snow. We have seen smaller lenders such as Newcastle Building Society pricing aggressively at 80% for a short period and then withdrawing. These rates were especially encouraging as they were available to borrowers with just a 20% deposit.
The sense of increasing competition in the market is growing. Lenders such as Barclays with best buy tracker rates have trimmed them as other lenders have cut their rates. Whilst the market is still dominated by lending for property purchases, with lenders such as Skipton increasing their standard variable rates, there will be much greater interest from borrowers who have been enjoying nice low standard variable rates, in remortgaging.
Many borrowers have been sitting on the fence waiting for rates to go up before they think about remortgaging. Those who continue to do this risk more than splinters as by the time they get round to remortgaging rates are likely to have risen.
The fixed or floating dilemma still continues for those choosing rates. For many borrowers the danger in going for the trackers is that the base rate is only going one way and that’s up. It was encouraging to see that Lloyds Banking Group, which is the largest lender in the UK, is in the process of preparing another securitisation, parceling up mortgages and then selling them on to investors. This market has essentially been shut since the problems in the US sub prime market emerged. This should increase the volume of funding available.
Research & Investments
The latest research trends and investment opportunities
Price Tracker – 2009 year ending results The latest Hamptons International research illustrates an average price increase of 3.5% in the final quarter of 2009, the third consecutive quarter of increasing sale prices. Across the full year prices increased 12% - a marked turnaround from pricing down nearly 20% in 2008. On average the strongest price rises were amongst larger units, with gains of more than 14% in the past year for 4-bed properties.
The results in the lettings sector showed a positive return from the second half of the year almost wiping out early declines. Following the drastic reductions of 2008 and early 2009, average rental values finished the year almost on a par with values at the start of the year, down just -0.9%. Recent price gains have been driven by a 38% increase in competition as demand from corporate lettings and returning ex-pats supports the market.
Initial investment yields remained fairly static in the past quarter, with the average in London at 3.9% and 4.7% across the wider country market. Yields have compressed around 85 basis points in the course of the past year. Average yields in Prime London areas sit around 3.7%.
View the Hamptons market update publication - 'Inside Access'