The property review

Has the property market fully shaken-off the impact from the pandemic, or are soaring costs casting a dark shadow?

PICTURE: TOLVADDON HOUSES

In its annual Market Monitor report, which has just been published, Alder King reports an “encouraging increase” in office takeup for Truro and the surrounding areas, despite there only being a “modest increase” in supply.

There’s a familiar story in Cornwall. While on paper supply exceeds demand, Alder King says a mismatch remains between what people want and what people can get. Those seeking quality office accommodation in specific locations, continue to find options limited. And again a common issue in Cornwall, increasing construction costs relative to values limits speculative development.

As for the industrial market, Alder King’s Market Monitor says last year there was an increase in supply and reduction in takeup, which was in part a readjustment following the impact of Covid restriction.

However, despite this Alder King says there continues to be limited availability around the Duchy, with most demand focused on the A30 corridor, a trend which is likely to continue given the current dualling between Carland Cross and Chiverton.

As with the office market, rising construction costs continue to present significant viability issues for many developments.

Turning to the residential side, the slowdown in the housing market has been well documented in recent months. As we move into spring, activity traditionally picks up, but there remains much uncertainty.

Charlie Huggins, head of equities at Wealth Club, comments: “The housing market is very difficult to call right now.

“There has clearly been a marked slowdown in housing market activity in the last six months. Faced with higher mortgage costs and soaring bills, it’s no surprise that new home buyers are exercising greater caution.”

He says many housebuilders like Barratt have been battening down the hatches, but the picture may be improving.

“The picture is not looking as grim as it was back in the autumn, following the disastrous mini budget,” he says. “Despite rising interest rates, mortgage rates have fallen in recent months due to intense competition between lenders. And there is a growing sense that interest rates are close to peaking. If that turns out to be the case, confidence in the housing market could quickly return.

“At this stage a range of outcomes are still possible. Barratt has seen early signs of improved trading in January but it’s still too early to say whether the housing market will suffer a mild downturn or a much deeper fall out, accompanied by substantial house price declines. In the meantime, house builders like Barratt are operating in ‘wait and see’ mode. “But at least things are looking brighter than a few months ago.”

Lynsey Carroll, new homes sales and marketing manager at Treveth, is more upbeat, however. Founded in 2019, Treveth builds high-quality new homes, sustainable communities, and commercial developments in partnership with Cornwall Council. Operating under a ‘Profit with Purpose’ ethos, Treveth says it puts Cornish people first. Residential property is offered to people who live, work or have family connections within the immediate vicinity of Treveth’s sites, and commercial developments support the property needs of businesses looking to grow and invest in Cornwall. Continued on page 28

The January 2023 RICS UK Residential Survey results highlighted a muted market, with new buyer demand, sales, fresh listings, and prices all reported to be on a downward trend.

Near-term expectations suggest this picture is likely to remain in place for a while longer as the market adjusts to a higher-interest rates in the UK.

Looking at the next 12 months, however, the sales outlook does not appear to be quite as downcast.

Simon Rubinsohn, Chief Economist, RICS, says: “Although some respondents to the January RICS survey have noted a little more interest in the housing market as the new year got underway, the overall tone of the feedback still remains subdued which is not altogether surprising given the jump in mortgage rates since the autumn.

“Prices, meanwhile, are now beginning to reflect the shift in balance between demand and supply.

“However, it is questionable how much downside to pricing there is likely to be given that recent macro forecasts from the Bank of England and others are now envisaging a less harsh economic environment this year.

“Meanwhile the rental market continues to show strong interest from tenants and limited stock available which is keeping a firm momentum to rental growth.”