The credit crunch is now affecting even the best property with values down by an average of more than 10%, according to Savills Research. This is considerably more than the 2.4% falls recorded for these properties in April.
The survey of agents, when first carried out in April, showed that the “best in class” properties, fell marginally whereas values for blighted or compromised properties had fallen by 12% and average property values fell by 6.9%. By October the effects of a lack of mortgage finance and weakened sentiment had filtered through to all qualities of property albeit to varying degrees, with average properties falling in value by 16.4% and blighted properties falling by some 24%.
‘Whilst the best properties have fallen in value, they remain those most likely to sell in current market conditions, with those purchasers, being in a much stronger position to secure a better class of property. Cash buyers are in the driving seat and because there is less competition from those requiring a mortgage, they are more likely to secure the best properties and can do so at a identifiable discount to the top of the market,’ says Lucian Cook director Savills residential research.
‘By contrast blighted properties have become virtually unsaleable in many cases, sellers remain unwilling to take such a large hit on values and buyers don’t feel that they need to compromise. These properties are always harder to sell in a tough market, when discounts become more pronounced.’
In April there was also a significant distinction between how properties in different price bands had been affected. Best in class properties below £500,000 had fallen in value by 3.1% whilst those in the over £2m bracket were down in value by just 1.1%. By October the falls were more significant at 10.5% and 8.1% respectively.
Likewise back in the Spring there were some areas of the country that remained largely unaffected by the credit crunch. The Savills Banbury office was still recording an increase in values for the best quality property (3.8%) and average property had fallen in value by just over 1%. In October however the picture was very different with values for the best property down by 10.6% and the average down by 17.5%.
‘The geographical pockets of resistance have largely given way, with the individual characteristics of a property including its aesthetics, setting, quality of accommodation now being they key to determining how it has fared in the downturn.’