26 March 2008

Will the first day of Spring mark a psychological fillip for the UK property market? Certainly the upper end of the market has proven more robust over the past 4 months with liquidity amongst buyers and a declining stock still driving sales and values in the £1 Million + sector.

Ash Grove, a 3300 sq ft new build house set in 1.5 acres East of Bicester in the village of Launton sold within 2 weeks of the marketing launch priced at £1.1 Million – buyers have certainly not run for the hills, they just want to see value and are prepared to negotiate hard to achieve it.

North Oxford activity has been extraordinary in the first quarter of 2008, with a number of "off market" sales taking place given sheer demand from parents with children at the top schools, Oxford High, The Dragon, St Edwards etc. Gavin West of Kemp & Kemp Residential comments " I myself, having sold my property in the Summer of 2007 have been drawn to keeping my eyes peeled in the streets of North Oxford during the Winter, the months when the 20 mile commute and school run seems more trouble than it is worth. The sheer competition however for property in this geography has continued to drive prices, despite the "credit crunch" and the negativity being proffered by the media. You have to have the stomach to involve yourself in a bidding war and it remains a good time to sell for North Oxford property owners. Kemp & Kemp Residential are currently transacting a sale in North Oxford where the bidding is running 15% ahead of the last sale in the road which was transacted in October of last year. Gavin West comments " I know of no other investment at the moment that has seen 15% capital appreciation in the past 6 months"

New development sales are also reasonably strong given that developers have to trade by and large to satisfy either shareholders or bankers. New Home sales through Kemp & Kemp Residential were outstripping private client sales by 3 to 1 during the first quarter of 2008. Gavin West commented "our developer clients have been prepared to discount in some cases up to 7% in order to drive sales over what has been a very negative Winter for the market. Unlike private clients, developers won’t wait a long period of time for a buyer and they don’t take their properties off the market – in a fragile market buying a new home can often yield very good value for a buyer.

Volumes will obviously contract in 2008 but the market has suffered its correction which has been in the order of 5% and the contracting supply continues to underpin values, given that demand has not gone away. Some normality may resume in the second quarter of 2008 but the year looks set to be marked by the shortage of supply with annual sales transactions looking likely to fall below the 1 million mark in the UK – which is a rare thing indeed.

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