Residential Performance

Reduced confidence and transaction numbers, evident in the residential market during 2008, continued through the first quarter of 2009. However, throughout the second and third quarters of 2009, the number of residential sale transactions has increased, with average annual basis price growth of -11%. This increased activity is a reflection of both vendor's and prospective purchaser's improved awareness of the market. During preceding months their price expectations had been unbalanced.

Despite inter-bank lending rates increasing in the short term, interest rates for borrowers remain relatively low, with the number of mortgages approved increasing. However, borrowers require substantial deposits which together with high arrangement fees, is suppressing the number of buyers in the market. This requirement by banks is also impacting on a number of housing associations, who have experienced protracted sales on a number of their shared ownership schemes. That said, some first time buyers are present and emerging in the market, as a time lag has allowed them to save.

There are signs, particularly in the apartment market in Mid Kent that values have levelled out, as these unit types are being bought by cash rich investors for private market letting purposes and by first time buyers. However, we have seen greater overall reductions in the value of apartments throughout Kent, when compared to houses. Demand for dwellings in West Kent, Canterbury and close to Ebbsfleet International station is good; however, demand in peripheral locations including Dover and parts of Thanet is weak, despite low values. In general, the majority of estate agents comment that they require a greater supply of dwellings on their books, which is partly the reason for values stabilising in recent months.

The demand for residential development land in Kent has reduced significantly since the peak in the third quarter of 2007, with values to date having reduced by between 40% - 50%. Developers are still present in the market, albeit with significantly reduced staff numbers. Those developers still seeking sites are not new to the market, but have been in existence for some time. Demand by developers for single or double building plots is still reasonable, providing an acceptable value can be agreed between vendor and purchaser. On the whole, developers prefer sites accommodating between 10 – 25 dwellings, to be developed for houses. Agreeing sales of development land is now more complex, with joint venture agreements between landowners and developers being more common place. Housing associations, with the assistance of Homes and Communities Agency (HCA) funding, are the most active land buyers, with some having acquired "off the shelf" new build stock from private developers who have experienced difficulties in selling their units to private buyers.

New build rates by location

Location	Average Price Range £/psf 2009
Sevenoaks	£300 - £425
Tunbridge Wells	£275 - £350
Tonbridge and Malling	£240 - £310
Canterbury	£220 - £290
Maidstone	£215 - £285
Whitstable	£200 - £285
Dartford	£200 - £275
Gravesham	£185 - £275
Medway	£160 - £235
Swale	£150 - £280
Ramsgate	£150 - £225
Ashford	£150 - £215
Dover	£150 - £195
Sheerness	£150 - £180

Source: Cluttons LLP Research