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Prime property - the indicator of recovery?

3rd July 2009 | back to article listings BACK    print this article PRINT

As news reports and expert speculation focus on the effects the credit crunch, economic downturn and indeed recession have had on the property and financial markets, the average home is generally what is being discussed.

The prime market rarely grabs the headlines, but for those who are considering an investment it could be an important one - both for a purchase and as an indicator of wider trends.

A report by Savills this week revealed that prime regional residential home values appear to have stabilised across the UK. In the south-east, a rise of 1.8 per cent was actually recorded and the company forecast that this sector would be the one to lead the wider recovery.

"Our expectation is that the prime regional markets will bump along the bottom through the autumn. By contrast, our assessment is that significant rises in the mainstream market are rather premature and could prove to be a temporary blip," the report read.

Commenting on this, director at Smiths Gore Robert Pritchard suggested that "strong evidence" exists to support the view that top-end houses are offering a good return on investment, perhaps even more than they were before.

He noted that this is a "quite incredible" situation, particularly as losses of 20 to 25 per cent were being predicted last year. "It is not all doom and gloom," Mr Pritchard said, although he added that this is not something that will be seen "across the board".

Nonetheless, the prime property trend could provide some insight into what will happen in the wider market. Investors may be interested to note that the recent Knight Frank Prime Country House Index showed that values have fallen by 20 per cent in the last year - similar to the average.

Despite this, figures for the first quarter showed a slowing in the rate of decline, with prices having fallen by 4.7 per cent. Compared to nine per cent in the previous three-month period, it could serve to provide credence to Savills' view that the market is set to stabilise.

Property buyers, in general, meanwhile, could be encouraged by recent Hometrack figures showing a stabilisation of prices. The typical house was worth £155,600 last month - just as it was in May and April. However, those who are looking to buy for investment purposes may wish to act soon as sellers are achieving greater percentages of asking prices - with this indicator rising from 89.6 per cent to 91 per cent over the course of the last months.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4867.html. Alternatively, please see our full press release archive.

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