Sometimes just the title of a panel discussion prompts verbal jousting of a most informative kind.
At MIPIM UK last month, a debated hosted by Estates Gazette and JLL on the state of the UK residential market, entitled Growing, growing, gone: Is the residential market turning? led researchers, lenders and landlords to question whether the market had matured or turned and whether developers were seizing the opportunities presented to them.
JLL’s head of residential research Adam Challis started off the debate, claiming that the market was “maturing, not turning”.
“The rate of growth is curving,” he said, adding that appetite for residential development was still present, with eight out of 10 developers confirming they were keen to continue to build.
He said that, to him, a maturing market meant getting back to a “normalised” rate of activity and that while London was leading the UK, it was still not back to 2006 levels, signalling there was still more growth to come.
Jonathan Samuels, chief executive of Dragonfly Property Finance, which provides small to mid-sized loans to the real estate market, said it was not any lack of finance that would slow growth.
“We’re finding that we have a lot of niche competitors but also that the banks have come back stronger, so there’s a lot of liquidity out there,” said Samuels. “I don’t think it’s a lack of supply of liquidity issue.”
He added: “On the other hand, if you look at rate of advances today versus previous peaks, we’re still only at a third of the peak of 2007. But that’s not so much a lack of liquidity. There are other issues that are causing that.”
For Nick Cuff, land director at Pocket, which develops homes for middle-income workers – those earning less than £66,000 pa – the issue with the residential market today is that developers are missing opportunities.
He said: “A price of £350,000 for a one-bed flat is not a healthy market. It is not healthy when 80% of the kit is being developed for 20% of the top income earners.
“So while there is an opportunity in the mid to lower market, the market itself isn’t taking the opportunity at the moment.”
For a video and more on the debate, click here.
