Grainger is upbeat - but still no green shoots yet

Feb 11 2009 By Graeme King, The Journal

THE UK's biggest listed residential property owner says it has seen slim signs of recovering demand in the market, but has stopped well short of identifying any "green shoots".

Grainger, based in Newcastle, said early January saw an increase in the number of viewings at its empty properties as pent-up demand started to be released among would-be movers.

But the landlord also revealed margins for the four month period from October to January had been cut from 47.3% last year to just 36.2% this year.

The company warned that many potential sales are being hampered by a lack of available mortgages, with lenders unwilling to lend to buyers without a very substantial deposit.

Prices are also said to be under pressure from cash-rich buyers looking to take advantage of the weaker market with offers far below asking prices.

Though recent house price surveys have signalled the pace of price falls slowing, Grainger said the volatile nature of the market meant it was too early to claim encouraging signs pointed to a permanent change.

Shares in Grainger rose 1.5% yesterday to 116.75p, but that performance has to be seen in the context that the stock was changing hands at 370p a year ago, and 670p two years back.

Grainger said it had sold 173 properties for £25.8m, compared to 207 for £38.8m during the same period a year earlier.

Its pipeline of deals, which includes all sales currently being processed, shows sales of £58.9m in the past four months, not far short of the £63.9m realised at the same point last year, which Grainger say demonstrates its ability to keep its estate moving, even in a very slow market.