Residential Transactional and Living Markets
Investment
Overview
Following on from Q1 2023, we made reference to a ‘Price discovery phase’ and this is very much still the case. The impact of higher interest rates is sinking in with both buyers and sellers but there is still a considerable gap between their price expectations…….albeit the penny is beginning to drop.
Residential Development
Overview
The continued impact of the increased cost of living, increased inflation and market uncertainty continues to soften demand right throughout the development market from land acquisition through to new build sales. Q1 this year was inevitably dominated by caution with the impacts of inflation, the residual effects of the mini budget and the steady rise in interest rates. There was greater positivity emerging in the market post Easter with the expectation that after prolonged periods of challenge there would be an upturn in the development market.
Student Housing
Overview
We were all hoping there would be signs that the ‘plugged’ capital would start trickling down and we would see transactional activity pick up as we head into the second half of 2023. Unfortunately, so far, interest rate uncertainty has prevented this from happening. It is estimated that PBSA transaction volumes are down by 47% on H1 2022 with most activity taking the form of off-market transactions.
The underlying confidence in the student sector however remains high and assets continue to perform, some better than ever before. Student demand shows no sign of abating with UCAS projecting a 30% increase in higher education applicants by 2030 – that equates to 1M students per year applying for university.