08 December 2009 - Belvoir Lettings -Trends in Letting, Qtr 3 2009 Report

Analysis

The letting market has seen mixed news in Qtr 3 with letting volumes increasing sharply but prices still under pressure across the board. Concerns on the economy and job security appear to have lessened and Landlords are heeding advice on property maintenance and lease flexibility.

The combination of these factors has helped drive average
Time to Let (TTL) down from 36 to 25 days with falls across all main property types and areas. Tenants are quicker to commit to properties possibly indicating more confidence in the economic environment generally. The instability and pressure on rental prices appears to be easing and although prices have fallen again in some areas it looks like prices are bottoming out. With TTL shortening tenants are spending less time negotiating on price for fear of losing a property. It is also clear that Landlords have accepted the need to realistically set prices to avoid lengthy negotiations and speed turnaround time.

Geographically we continue to see a robust apartment market in the City Centre and South Belfast with high volume of transactions however prices have continued to slip by circa 5%. On the plus side TTL has fallen in both areas with a significant reduction in the South of the city to 21 days from 35 at the end of Qtr 2 suggesting strong demand and we are hopeful that prices have now stabilised. We are also seeing Landlords heeding advice on maintenance and furnishings, with investment in quality generally ensuring a positive turnaround in time. We continue to recommend this approach to Landlords as potential tenants still have access to a wide variety and supply of properties. At this time of year maintaining boilers and heating systems in both occupied and vacant properties is important. Landlords should also consider what advance maintenance is required before the turn of the year when Tenants inevitably consider whether to renew leases or move.

As Q4 begins we still see a high supply of properties available in what is traditionally a slower period as we approach Christmas and in addition we are beginning to see some major new developments in the Titanic quarter coming on stream. This increase in available properties is good for tenant choice but has the potential to put further pressure on prices and time to let. We also continue to monitor developments in job security and economic issues, particularly in the Public Sector services which may have an impact on the letting market in some areas.

Looking further ahead we feel landlords are holding their breath for developments in the property market in Spring 2010. We have seen some willingness to take short leases of 6-9 months which will free properties for potential sale early next year. This may be due to a perception that property prices will begin to rise and allow owners to realise capital which has not been available whilst sale prices have been declining over the last 2 years. It remains to be seen how property prices behave should volumes of ‘for sale’ properties rise substantially, how bank lending will change and what impact these factors may have on the rental market.

For a copy of Belvoirs Q3 2009 Trend Report please contact Andrew Jack at 028 9022 8409 or e-mail andrew.jack@belvoirlettings.com



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