DAA Residential – Review of the year – London Property Magazine November 2011

Review

2011 started with alarming press headlines about the apparently gloomy state of the housing market. In fact, despite the disappointing performance of UK property prices generally, the housing market in Wapping and the Docklands grew stronger as the year advanced.

Throughout the year the type of buyers changed with many overseas buyers entering the market for the first time along with older wealthier buyers with equity buying properties in the £500k to £750k price range. Statistics from DAA Residential Ltd’s sales department shows that this year some 40% of all properties sold went to overseas buyers.

Following the April tax increases and the higher stamp duty it took a while for sales of properties in the £1.00MM plus range to return to normal as potential buyers took their time to digest the new 5% stamp duty.

As the summer progressed, however the market grew more buoyant for most price ranges as buyers bought quality apartments often in warehouse conversions or/and with river or dock views. Sellers also priced their properties more realistically and thus sold quickly to buyers who already had finance in place. Likewise, properties in the £1.00MM plus range took off again.

This year, many investors saw rentals increase by nearly 8.0%, hitting their second highest level on record and boosting landlord’s yields of 5.0% to 5.9%, with some properties getting a higher return.

Throughout the year, rental growth escalated much faster than capital growth driven by a shortage of good quality rental stock and a growing demand from first time buyers who were unable to get on the property ladder because of stricter mortgage lending criteria. No wonder therefore, more and more investors are looking to the ‘buy-to-let’ market for gilt edged investment opportunities with a steady income stream.

So what’s in store for 2012?

Let’s start with the positive story. With the Olympics just months away, DAA Residential is involved with an increasing number of all inclusive, fully serviced short term Olympic lets, mainly to overseas media, PR and other professional hospitality companies attracted to Wapping’s Thames side location and proximity to Stratford. We are also speaking to a large number of homeowners looking to sell during the Olympic year and we are experiencing more new applicants registering for properties than at any other time during the year.

Of course, we cannot ignore the troubles in the Euro zone, ongoing volatility in the financial markets and very lacklustre economic growth forecast for the UK in 2012. It would be naïve to suggest that these developments will not affect Wapping’s property prices.  So far these have stayed buoyant mainly due to a lack of supply. Next year, this supply/demand imbalance however could change but in what direction remains to be seen.

Interesting time ahead!