INCREASE IN CENTRAL LONDON RESIDENTIAL LETTING TRANSACTIONS IN Q1 2008

As the residential sales market is London slows down in the light of the escalating credit crisis both in the UK and US, Hurford Salvi Carr, specialist estate agent for the City, Docklands and West End, release figures which show a strengthened lettings market in the first quarter compared to last year.

A 5% drop in sales during the first quarter of this year has been reflected in a similar percentage rise in Hurford Salvi Carr’s lettings division; with 5.5% increase in new lettings as compared to the first quarter of 2007.

Kari Trajer, Associate Director of Lettings at Hurford Salvi Carr believes this is a direct result of current sales market conditions and the global credit crunch which has tightened lending constraints and put many people off buying.

She comments: “The credit crisis has definitely hit confidence in the residential sales market. Problems at banks like Northern Rock and Bear Stearns has brought the credit problem to the forefront of many people minds. However this has had a knock on effect of strengthening the lettings market this year as people are now renting for longer, or choosing to rent, when historically they would have bought. A concrete example is the classic pied a terre. Last year, commuters, international business people and parents of students studying in central London were quick to purchase a London property with a strong capital gains projections and good buy-to-let potential. Now, however, a lot of those ”would be” buyers are simply choosing to rent.”

As well as new lettings, Hurford Salvi Carr has also seen an increase in renewals on last year (up 9.0% compared to the first quarter of 2007) which suggests that more people are renting for longer. Kari Trajer continues, “The increase in renewals we have seen so far this year, are primarily amongst ‘would-be’ first-time-buyers. Restricted credit conditions are making it more difficult for first-time-buyers to get the mortgages they need, particularly in London where house prices are still way above the national average.”

The growth in the lettings market is bringing London in line with other European cities such as Paris and Rome where the majority of residential property in the city centre is rented on long-term tenancy agreements.

Hurford Salvi Carr has seen a significant 10.7% increase in instructions compared to first quarter 2007. Kari Trajer believes this is as a result of vendors who are hanging onto properties for longer rather than attempt to sell in the current unstable property market.

She comments: “In the same way that a lot of buyers are wary at the moment, vendors are also hesitant to sell and many are choosing to let their property as an alternative as the returns are more secure. This is helping to meet the demand in London, particularly for the ever-popular one and two bedroom apartments.”

Although Hurford Salvi Carr’s first quarter figures seem to offer a pretty concise insight into way and in what way the London lettings market has been affected by current market conditions, Kari and the team are keen to point out that first quarter figures are generally weaker, in any given year, than second or third quarters. They will be watching how the lettings market is played out over the coming months. Kari comments: “These figures certainly indicate a positive outlook for the London lettings market compared to the same time last year when sales were so strong.”