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Hamptons International Reveals Bounce in Sale & Rental Prices

Average Annual Rental across London


Hamptons International
, one of the UK’s premier international residential agencies, has today released the very latest figures from its Property Price Tracker, revealing a steady rise in sale prices and leveling out of rental prices across the UK market in the last quarter of 2009.

Hamptons figures indicate there has been an increase in average sale prices during Q2-2009 of 4.2% compared to Q1-2009. Average prices in London picked up 5%. Across major commuting locations around the capital, prices increased by 2.6%.

Price gains are being driven by competition in the marketplace – with 75% more applicants than this time last year, Hamptons International figures show the ratio of would-be buyers per seller is now nationally around 9-to-1 in line with the ‘good property markets’ of 2006/07.

Looking at the cost of renting, there was very little movement in average rental prices in Q2-2009, up only 1.1% compared with Q1-2009. Geographically rents for London properties were very flat, whereas the wider Country market was up 2.5% in the quarter.

In fact, the renewed strength of the sales market saw the return of yield compression, with yields contracting slightly in Q2-2009 to an average of 4.7% from near 4.9% in the prior quarter, a decline of around 17 basis points. Yields for smaller properties remained higher than larger unit sizes, with as much as a 130 basis point swing from a one-bed flat to a five-bed house. Average yields outside London were 5.2% and inside London they averaged at 4.2%.

Overall, these latest Hamptons figures reveal that housing prices have been leveling out during the early part of 2009. This trend has been replicating across many locations in the UK for a consistent period illustrating this is more than a unique occurrence in one sector of the housing market.

The London Market
The latest findings from Hamptons International reinforce the trend of sale prices picking up throughout Q2-2009. There are distinct signs the market during the summer has strengthened at a time when traditionally activity drops off. Leading statistics include:

  • Recovering sale prices, up 5% in Q2-2009 against the first quarter of the year. Smaller properties for sale are proving most popular, rising 6.7%, with fewer price gains this quarter in mid-market three-bed flats/terraced property.
    ” As a result of supply and demand dynamics the London market now sees more than nine applicants registering for each new instruction taken on.
  • Significant applicant numbers and a shortfall in newly available property are behind the stabilisation in pricing. With applicant numbers up more than 60% compared to the same time last year.
  • London applicants have been increasingly busy in the market, with viewings up 34% and offer numbers up 77% compared to the same time last year.
  • For the first time this year average asking rents in the London rental market gained ground, with a quarterly increase of 0.3%. This follows significant declines in previous quarters with average prices down -4.7% in Q1-2009 and -9.8% in Q4-2008.
  • Rental prices started to strengthen most noticeably at the larger unit/premium end of the market with five-bed detached houses gaining 2.9% in the quarter.
  • With an 82% rise in the number of new lettings applicants compared to last year we have examples of in-demand property re-letting for double the previous rental level.

Rob Bruce, research manager, Hamptons International notes, “Our latest figures demonstrate climbing prices in the London sales market, with early indicators suggesting a comparatively steady flow of new buyers still entering the market, even during the typically quieter summer months. Statistics now show the progression from offers via agreed sales to exchanges: with offer levels up 77%, agreed sales at double the rate of last year and exchanges up 81%.”

“Demand from tenants in the London rental market has increased, with new applicants up an average 82% on last year and offers up 46%. In areas such as the City, Notting Hill or Knightsbridge figures show there are more than twice as many applicants compared to the prior year. This change is leading to examples of in-demand property re-letting for double the previous rental level.”

The Country Market
For the first time in 2009, we have seen solid month-on-month price growth across the country market, with prices up 2.4% over the quarter. The market is now looking substantially different from the -0.8% loss in Q1-2009.

Rental prices have also rebounded in a similar pattern across many regions, with the average value up 2.5% in the last quarter. Well-located mid-market property for rent with three or four beds performed strongest picking up around 5%.

The positive indicators abound in the country market, for example;

  • Applicants in Q2-2009 were 61% higher than Q2-2008; at similar levels to the gains seen in the London market this indicates the breadth of the interest in the property market at present.
  • New supply is still down against last year by 10%, but closing the gap against last quarter when new stock was 19% lower compared with the prior year.
  • Sale prices picked up 2.4% as a result of the disparity between new stock coming to the market and the increased applicant numbers. Prices of smaller units – one or two-bed properties showed the most resilience in the last quarter, up nearly 3%.
  • Letting prices picked up an average of 2.5% in the last quarter, compared with a decline of 1.6% in the opening quarter of 2009. Most of the gains came from larger property sizes in the shape of four-bed or five-bed homes up 3.6%; built on the strong demand for family homes in easy commuting locations.
  • Average investment yields across country locations were 5.2%, down fractionally from 5.4% in Q1-2009. The strongest yields of 5.5% to 5.9% were found at the one and two-bed end of the market.

Research manager, Rob Bruce added, “The strong sales performance across many country markets in the early months of 2009 is now translating into actual exchanges, with figures 58% higher than Q2 last year. This activity is now closing the gap on exchange levels in 2007/2006, but is still 20% below the long-term trend”.

 

Average Investment Yields across London

Average Investment Yields across Southern England

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