“It’s a market of two halves” says George Cardale, the newly-appointed head of new homes for Savills, who I met this week in his first interview in the role.
His half (actually rather less than half – it’s the new-build top end, high quality stuff that he sells) is mostly but not wholly in city centres. Highly specified properties in this sector are still mainly flats rather than houses and although the position is not as bad as it was, Cardale admits sales remain well under 50% of peak volumes.
Savills’ own data shows that in May 2007 it was recording almost 200 new home reservations per month – that fell to just 25 per month in the second half of 2008 and now runs at just under 75, although the picture remains highly volatile.
But what’s changed most in this well-heeled sector is the clientele.
Outside of central London, downsizing owner-occupiers now account for over 50% of sales; next up comes first time buyers (and these top-end ones get cash help from Mummy and Daddy) and then perhaps 15% of purchasers are investors. Back in 2006 it was roughly the reverse – 15% downsizers, up to a third first time buyers, and the slight absolute majority would have been investors. How times change.
Cardale, still based in Bristol but with corporate responsibility for the agency’s new homes sales across Britain, uses his home city as an example of the downturn.
“In April 2008 we [Savills] had 1,600 new homes for sale in Bristol and in April 2010 we had 720. In the city, irrespective of who was selling, there were about 2,000 to 2,500 new homes being completed in 2008 but in 2010 it’ll be under 1,000” he says.
Cardale reiterates the problem that continues to dominate the residential market at every level – lack of finance.
There are few available funds for developers (smaller schemes, of houses not flats, find it easiest to get bank funding he says, while many niche developers are trying to raise private equity) and we all know that in the wider world buyers in general have difficulty obtaining mortgages.
Which brings us to the vast majority of the new-build market – those priced up to about, say, £300,000 which are not touched by Savills and other top-end agents.
Although these volume developers are certainly more optimistic than before, they remain cautious says Cardale – and they are, of course, more vulnerable to wider pan-economic shocks caused by public spending cuts and tax rises.
Savills’ new, new homes man is relatively outspoken and plays a straight bat in a world where many speak in more coded language. That forthright approach may be needed as he, and the rest of the new build sector, wait to see what lies in store next.
“It’ll be an interesting next six months” he says. “Mind you, I’ve been saying that every six months for the past few years…”
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