2009’s indicators for property sales, property pricing and the examination of investment yields show a steady improvement in figures for the housing market.
With financial institutions releasing bonuses once more, it has unleashed new confidence into the market. Hamptons International, a UK leading property company predict that owner occupier and investor numbers will both be on the increase in early 2010.
One area that stabilised in Q3 and therefore underpinned the whole market was the rental prices. The strongest rental performance of 2009 was in Q4 where the London market rose on average by 2.2%. In areas such as Knightsbridge and St Johns Wood the rental pricing still commands on average £46 – £47 per square foot. Essentially, this has been due to the lack of Prime stock in the letting sector; therefore the pressure has pushed the rents higher.
The aforementioned bonuses renewed interest from the corporate world and therefore business lettings would have certainly added to this growth. Furthermore, the gains were led by larger sized units. This continues the trend of the earlier quarters and is mirrored in the market of properties for sale.
In fact, London sale prices experienced an annual growth increase of 16.4%. The strongest period of 2009 was Q3 with a 6% increase. The pace of growth slowed during Q4 with an average of 4.3%. However, this reduced growth can somewhat be ascribed to seasonality.
The hardest challenge for the new investor was to ensure that they had sufficient knowledge of their chosen area. It has become increasingly difficult to achieve a strong yield in a new area as over the course of 2009, yields dropped by 85 basis points. This resulted in a larger range of yields from 5.1% to 3.1% and proves how intrinsic local knowledge for property investments has become.
However investment yields did remain fairly static in Q4 of 2009. The top yield areas are City, Notting Hill and Clapham which bring between 4.5% and 5.2%. The average yield across London properties is 3.9% but some prime areas sit below this; Kensington 3.2%; Knightsbridge 3.3% and Richmond with 3.5%.
Another indicator that the London Market is set to continue with this gradual growth is the 23% rise in sales applicant numbers. Viewing numbers were also in growth by 10% and the offers were up 27%. Although there was a decrease during the holiday period, these figures still remained strong. It does however illustrate that the first quarter of 2010 will be a crucial time for buyers and investors. Undoubtedly they will assess their portfolios and examine the market indicators for the short and long term opportunities in the UK housing market.
