The outlook for the prime residential markets in which we operate still looks uncertain but positive signs are beginning to appear in certain sectors.  Prices have now fallen by 20 to 25% from their peak in 2007 and many buyers perceive that property is offering some value once again. 

Since the beginning of 2009 selling agents have been reporting a significant increase in viewing levels.  Only a few months ago sellers were ignoring this change in the market, creating a large gap between buyers’ and vendors’ expectations on price as a result.  This is now changing however, as a growing sense of realism dawns over the market with those sellers that need to sell beginning to quote sensible asking prices at long last.  Sales volumes are, therefore, now on the increase, with needs-driven buyers once again entering the market, albeit with vastly altered expectations.

Investor and saver disillusionment with banks, bonds and equities is also helping the residential market.  Despite price falls, bricks and mortar is seen by many cash and equity-rich buyers as being a safe and tangible asset to hold, especially if buying for the long term.

For international buyers, the falls in the UK market coupled with the weakness of sterling have created considerable opportunity, evidenced by increased interest from euro-rich buyers across the prime markets, keen to exploit what is effectively a 'half-price' sale on values seen a year ago.  With more of an over-supplied market in London, relative to buyer numbers, patient investors have both choice and time on their side, and with the right advice can negotiate strongly at all levels. 

Competition is once more developing for those properties that are realistically priced and those that have been languishing in the market for 6 to 12 months are now selling.   These are setting new benchmarks so it is easier to analyse values in the current climate.

Undersupply is increasingly becoming the problem within many sectors of our markets as discretionary sellers are already notable absentees from the market.  Selling agents are worried about new stock levels for the spring market and we predict that supply will be very limited throughout 2009.

Therefore there are signs that the bottom of the market is nearing and this could well happen by the end of 2009.  Once this stage is reached we do not expect a bounce back in prices as the market is likely to plateau for much of 2010.

Please see below the latest market comments from Savills Research covering the Residential and Farmland Markets.