Savills Research | The Residential Property Focus May 2009
Summary
Despite signs that the market is close to the bottom,
the road to recovery remains a complex one.
n The very rapid adjustment of house n Rates of fall in the prime central London n Some of the most prestigious locations
prices has shortened the period of house market during the first quarter of 2009 where prices grew dramatically in the boom
price falls, compared to the last property were half those seen in the closing months on the back of city money, remain exposed
cycle, suggesting that the bottom of the of 2008. to the potential of forced sales, although
market, certainly in the prime sector, is there has been a tendency for families to
in sight. n Residential investment looks set to relocate, making their former second home
expand during the next 20 years, but there their main residence.
n We have not changed our projections of will be a need to further develop products
April 2008 concerning the depth of house such as shared equity and ‘build-to-let’, in n Buyers seem to be sensing that the
price falls of -25% peak to trough, and order to attract lenders and investors, as market is approaching its floor, and we
believe the residential market has the seen well as meeting the underlying occupational suggest that the prime markets are within
the worst of its falls. demand for housing. 5% and 10% of their bottom.

n By 2019, our long term forecasts suggest n First-time buyers and, to a lesser extent, n The cost of owning is now in line with,
that inflation-adjusted, 10-year house price mortgage-dependent upsizers, will only or in many cases cheaper than, the cost of
growth should be in line with the long term become active in the market when, and if, renting, even accounting for moderate falls
40% inflation-adjusted average, even if equity becomes available to them. Deposit in rental values.
nominal growth is less aggressive than it affordabililty is likely to be more important
has been historically. than mortgage affordability in the future.

For further
information
please contact
a member of
Savills research
team…
Yolande Barnes Jacqui Daly Lucian Cook Jim Ward
Director Director Director Director
020 7409 8899 020 7016 3779 020 7016 3837 020 7409 8841
ybarnes@savills.com jdaly@savills.com lcook@savills.com jward@savills.com
Marcus Dixon Carrie Scrivener Neal Hudson Faisal Choudhry
Associate Director Associate Director Associate Director Associate
020 7409 5930 020 7409 8744 020 7409 8865 0141 222 5880
mdixon@savills.com cscrivener@savills.com nhudson@savills.com fchoudhry@savills.com
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