Update: Sales slump sinks Savills

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Date: Tuesday 08 Jul 2008

LONDON (ShareCast) - Estate agent Savills hopes a cost cutting programme will help it weather the storm hitting the property market that has caused sales in London to almost halve during the past six months.

Transaction volumes in the capital are around 45% lower year on year, with prices falling by around 7.5% in central London during the period as potential buyers struggle to afford expensive mortgages.

Prime country property, initially less affected than London, is now following suit, but there are no such worries for those with plenty of cash as properties worth over £5m are proving “relatively immune” to the downturn.

Deteriorating conditions are making it “very difficult” to predict the outcome for the year, said Savills, with its UK and US commercial capital markets businesses and UK residential and mortgage broking units continuing to worsen.

Volumes dropped significantly on last year during the six months to 30 June, while the number of transactions is also falling in many parts of Europe as financing becomes more difficult to obtain.

Meanwhile, UK tenant demand has been fairly resilient across most sectors, but rental growth was subdued.

Transactional businesses in Asia is also proving more resilient, but the credit crunch and economic concerns are beginning to be felt in the more developed Asia Pacific countries, such as Australia and Japan.

Results for the half year ended 30 June are due on 28 August.

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