Housing market showing real shoots of recovery
According to the latest 'property price tracker' from Hamptons International, there has been a step-change in the rate of price declines, with a quarterly decrease of only -0.8 per cent in the first quarter this year compared with a quarterly decline of -7.6 per cent in Q4 2008.
Likewise, the lettings sector, where supply far exceeded demand, is now mitigating slightly, with a decline in letting values of -3 per cent in Q1 2009, as opposed to a drop of -6.8 per cent in Q4 2008.
According to Hamptons, although important not to get too carried away, there have been definitive signs of the tumultuous and unprecedented speed of the downturn bottoming out in the first quarter of the year.
For example, in London, for the first time since the end of 2007, average sale prices recovered 0.5 per cent in Q1 2009 against Q4 2008.
Hamptons said that much of the flattening out in prices could be attributed to the increase in new applicants and the reduction in property on the market. For example, new applicants increased by 13 per cent over the same time last year, with a corresponding drop of -17 per cent in new instructions.
Applicants in the market have been very active, with a 13 per cent increase in viewings and 7 per cent increase in the number of offers for property compared with last year.
Meanwhile, across London rental values dropped by an average of £92 per week during the last quarter.
Initial investment returns slid 28 basis points in the last quarter as a result of the downward rental returns, to an average of 4.5 per cent, and the strongest yields, above 5 per cent were found in the City, Clapham and Paddington.
Rob Bruce, research manager at Hamptons International, said: "Many prime areas of London are significantly benefiting from the increase in international buyers, with prices flattening out this quarter.
"In areas such as Knightsbridge, St John's Wood and Paddington sale prices rose between 2.2 per cent and 1 per cent in early 2009.
"More of the gains have come from three or four bedroom properties as buyers take the chance to move before the marginal gain from trading-up is wiped out."
Although the market across the country continued to see a decline in average capital values, this has dwindled with a far smaller loss than any quarter during 2008, down -0.8 per cent.
With letting values down 3 per cent, this also showed more stability than prior quarters, and the decline in letting values still continued to outpace the decline in sale values.
In addition, the supply of new sales property coming onto the market is 19 per cent lower than early last year, while in the lettings market has near double the number of instructions of early 2008.
According to Hamptons, the slowing supply on the sales market is holding up pricing, while additional stock on the lettings market continues to weigh down the market.