Waiting game continues as property market stands still

Is there any hope on the horizon for the residential property market? Sharon Dale reveals there is for those of us prepared to wait.

Patience is not only a virtue it’s a necessity for anyone who has money in bricks and mortar.

A full recovery from the devastating effects of the credit crunch and ensuing recession may take Yorkshire another four years, according to Lucian Cook, residential research director at Savills estate agency.

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Lucian, who was in Leeds yesterday for a Savills seminar on market trends, illustrated his point with pictures of a motionless living statue and Lonesome George, the Galapagos Islands’ giant tortoise who barely moved.

“The point is that the property market is static and likely to remain so for he next few years, though Lonesome George has just died, and the property market isn’t that bad,” he says, reassuringly.

While another four years with prices and activity in the doldrums sounds like forever, when added to the five we’ve already endured, that’s a Yorkshire average, which some of the county’s most desirable areas are almost certain to outperform

Yorkshire housing transaction trends show that York is the star, performing at a solid 68 per cent of the 10 year pre-credit crunch average. Harrogate is closely behind at 63 per cent, while Leeds is 53 per cent, Hull is at 44 per cent and Bradford 41 per cent The national average is 55 per cent.

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“Yorkshire’s average transaction levels are below 50 per cent, which suggests that it is a weaker market than the South East, but what people outside the area don’t realise is that Yorkshire is polarised.

“Areas like Harrogate and York that have equity-rich buyers are doing well but on the other hand you have Bradford and Hull, which are struggling because buyers there tend to rely more on mortgage finance.

“As for prices, we think they will remain static until 2016, perhaps with slight falls in some areas , although the prime markets, like York, may see a return to price growth by 2014,” says Lucian, who adds that while the situation is proving difficult for some, it is bringing great opportunities for cash rich buy-to-let investors.

Prices are low, gross rental yields are six per cent and demand for rental property is at its highest for decades as first time buyers and second-steppers struggle to get mortgages.

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Savills say there are 4.8 million households in private rented accommodation and that figure has grown by 1.4 million since 2007. It is predicted to rise by another 1.1 million over the next five years.

“The aspiration for home ownership is still there, but the ability to achieve that is much reduced and so we’ll see a lot more people in the private rented sector.

“We estimate that the UK needs to invest £2bn in private rentals over the next five years and individual investors can’t satisfy that, which is why we are predicting a growth in institutional investors buying in bulk or building to let, first in London and the south east and later in the north,” says Lucian, who adds that there will be a need for more family homes to let.

Developers too are sensing opportunities, according to Matthew Jones, Savills Residential Development Director in Leeds, who says that stalled and new schemes are starting up and land is changing hands.

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The seriously wealthy have also sensed that now could be the time to buy.

Ben Pridden, head of residential in York, says: “In recent months some houses in York have surpassed prices not seen since the top of the market and for the first time in several years we are finding buyers for trophy houses in excess of £2m.

“We have seen more activity in the £2m-plus market this year than in any time since the heady days of 2007. Buyers are beginning to sense we are near the bottom of this negative cycle.”

Some are moving from London and south east to bag what they see as a bargain.

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“The gap between prices in London and Yorkshire is at its widest for 15 years. For the price of small flat in Fulham you can buy a beautiful family home in a prime area of Yorkshire,” says London-based Lucian.

“Yorkshire is pretty compelling as a place to live. People are charmed by it, especially the countryside in North Yorkshire, and the transport links to London are also a draw.

“They are excellent. Moving the family up there and working in London is do-able and I think we’ll see more of that. which will help kick start the market in those prime areas.”