STRENGTH IN DEPTH FOR RESIDENTIAL PROPERTY MARKET

David Richardson FRICS, Managing Partner of Arnolds Chartered Surveyors, believes that the local residential property market has considerable strength in depth and is likely to continue to perform significantly better than many other parts of the country.

National "experts" fail to recognise that local conditions can vary enormously and, put simply, to dump Norwich transactions in the same pot as those in Aberdeen or Bristol to produce an average price can produce some very misleading results.

Modern mews houses and apartments in the Whitlingham Hall are selling at up to 8 units per month, with prices from £199,500 to £480,000.

East Anglia in general and Norfolk in particular has shown the strongest growth in residential property prices over the past 12 months and this is based on a strong local economy, full employment and the value for money which prospective buyers perceive in the local property market. "Why should this change when the fundamentals remain the same?" asks David Richardson who goes on to point out "Interest rates have been held at an historic low for over nine months and are more likely to come down than go up. Inflation is at an even lower level and even though the Iraq war has had a slightly dampening effect on the market, most of the fundementals remain positive."

High quality properties such as Colney Old Rectory inevitably attract enormous interest and marketing strategy to enable the highest possible price to be achieved is most important.

"The only danger is over-optimistic owners and over valuation by misguided or inexperienced estate agents. It is imperative that owners use a professional and experienced valuer who does not over-value simply to gain instructions …. and Arnolds certainly fall in to that category."

Mr Richardson firmly underlines the fact that property remains an outstanding investment at a time when the stock market looks as if it may fall for the third year in succession, when 2% or 3% is the best you can get from a bank or building society and with the Equitable Life Fiasco and other financial disasters having destroyed the trust of investors.

Mr Richardson points out that Norfolk property prices increased by 20% or more over the last year and, for owner occupiers, this gain was free of tax! He agrees that the rate of price increase may well slow down but will still, in all probability, be significantly ahead of inflation and most if not all other investment returns.

National "experts" are playing down the "buy to let" market suggesting it may have peaked but again David Richardson sees no reason why things should change. Bearing in mind that the typical rental property now yields between 5% and 7% gross before increases in capital value, one can see why so many people are keen on property purely as an investment. Pleasingly, in the Norwich and surrounding areas, the demand from tenants remains strong and rentals have held up well, and indeed have grown, despite the increased numbers of rental properties from which they can choose. Obviously "buy to let" properties do not look particularly attractive if you have to borrow 100% of the purchase price but those who were unfortunate enough to invest with Equitable Life or in the stock market may well have done better to have used the money as a deposit, borrowed the residue from specialist mortgage lenders and made a handsome gain as well as deriving a return on their capital by way of rental.

Finally Mr Richardson points to the local economy which remains very strong with full employment and expansion in many areas. Arnolds Commercial Property Department is particularly busy … it is very often the commercial property market which shows the first signs of weakening if there is an economic slowdown on the way.

David Richardson believes that with the quality of service that Arnolds provides, clients considering selling or letting property may be assured that the right results should be achieved. Buyers should have confidence that the market is likely to continue to grow (although not at such a spectacular rate in the immediate future) and that buy to let investments remain preferable to almost anything else in the market.

David Richardson FRICS
Managing Partner
Arnolds
July 2003

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