Are buyers returning to Richmond? (From Your Local Guardian)

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Are buyers returning to Richmond?

1:57pm Tuesday 27th January 2009

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House market jitters could be calmed by the return of an unlikely hero – the property investor.

Estate agents in Richmond believe rock-bottom interest rates – the lowest in 315 years – make bricks and mortar an attractive investment again.

With savers getting next-to-no return on cash in the bank, buying flats and houses suddenly makes a lot of sense.

First-time buyers who can scrape together deposits are now finding themselves competing against savvy investors for the best bargains.

The buy-to-let market, which seemed dead as a dodo two months ago, now looks the place to be – a welcome piece of good news for understandably disheartened sellers.

One-bedroom flats in Richmond are down to £144,000, while in some parts of neighbouring Kingston borough you can buy studio flats for as little as £50,000.

Savers who see interest rates melting away to nothing are being lured back to bricks and mortar by the prospect of five, or more, per cent rental returns, while the more upbeat estate agents are warning those waiting for prices to bottom out not to be ambushed when the inevitable revival begins.

Realistic pricing is still key to freeing up the rusted housing market, but once word gets round that property is moving again, pent-up demand will come into play.

“There are many more frustrated savers than there are mortgage borrowers,” one housing market expert explained.

“They are increasingly perceived to be getting a raw deal, and though savers have less tucked away in their accounts than the average home buyer has borrowed, they collectively have more than £1 trillion in savings, deposit and cash ISA accounts.”

Average bank and building society instant access account rates stood at 1.68 per cent in November, and have fallen further since then.

Forty per cent of accounts now pay one per cent or less on deposits of £5,000, while 7.5 per cent of accounts now offer interest of just 0.1 per cent.

Banks and building societies fear customers may stop saving altogether if interest rates fall further, with one and two-bedroom flats being the most obvious alternative to leaving money languishing in accounts paying derisory rates.

Lenders’ demands for high deposits has been holding back some first-timers, but this week’s news of fresh government pressure on banks to lend, lend, lend is expected to ease that bottleneck.

“Property remains a ‘safe haven’ long-term, with rental in great demand in a world where other sectors – banking, shares, pensions – have shown instability,” remarked one local estate agent.

The return of property investors and the inherent British passion for home-ownership – a part of the nation’s DNA – are driving a pick-up in interest in property in Richmond borough, and surrounding districts.

Estate agents, leaner and sharper after being forced to contract in size in the second half of 2008, are quietly confident in key sectors of the market.

Small cottagey houses, flats near ameneties and transport links, and realistically priced family homes are selling, even if other parts of the market (such as large detached homes) are still tricky to shift.

“Money is now cheaper to borrow than ever before, and we are selling properties,” said Ken Johnston of Jardines in Twickenham.

Another agent reported: “Because of the superb mortgage rates at the moment, people are finding they can save £200 to £300 a month by buying rather than renting. If you’re looking ahead a couple of years, this is a good time to buy, and people are starting to come back.”

Estate agents’ cautious optimism gives some localised credence to the remarks of Prime Minister Gordon Brown’s adviser Baroness Shriti Vadera, who attracted political flak after remarking that she could see signs of green shoots of recovery at a time of further grim news on the unemployment front.