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After the dramatic impact of the credit crunch, the residential property market has been irrevocably altered.

• The property market has been irrevocably changed by the credit crunch but whatever shape it takes in the future the demand / supply imbalance makes a recovery inevitable. Those best placed to take advantage of this recovery are those investors and developers who entered the downturn with low debt levels, special skills and access to equity. These will become the new and successful players in the residential property market of the future.
• We cannot rule out further price falls in the mainstream market this year. However, because affordability has dramatically over-corrected, further falls will not be as significant. We, therefore, stand by our forecasts that total falls from peak will not exceed 25% peak, but sustained house price growth will require low interest rates, an improvement in the accessibility of mortgage finance and a recovery in economic growth, factors which will enable mortgage-dependent buyers to join the equity-rich.
• As predicted, prime central London has so far led the recovery in UK house prices where values rose by 4.3% in the three months to the end of June 2009. This positive trend has begun to filter through into the markets outside the Capital, where its influence is strongest, with small price rises seen in the commuter strongholds of Surrey and Kent and some of the established prime locations in the south such as Bath and Winchester.
• Cash-rich owner-occupier buyers have not just focussed their attentions on second hand property, but also identified opportunities in the new homes market, concentrating on acquiring fully completed, fully discounted schemes of a good design and high specification. This has boosted sales rates and in turn led to signs of sporadic land trading activity for high quality, small (less than 50 units), often freehold sites in high demand locations with deliverable planning permissions and phased payment terms.

Contact Information Yolande Barnes +44 (0) 20 7409 8899 ybarnes@savills.com

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