Citylets Rental Report Q4 2007 Summary

‘Exit, pursued by a bear’ seems an apt phrase by which to describe how equity markets ended 2007, as sentiment changed over the turn of the year. There were January sales of a different kind as $100 billion in subprime write downs, an ever worsening US housing market, tightening credit, rising prices, slowing retail sales and a proliferation in the use of the r word (recession) brought out the sellers in global equity markets.

Monday 21st January was billed as the most depressing day of the year and certainly turned out to be the case for the management of Societe Generale. As they began to unwind the positions of rogue trader Kerviel and equity markets were a sea of red, Citylets experienced a new daily traffic high. Coincidence? Well, yes but it would appear that cumulative effect of the events of last year have increased uncertainty and triggered demand for rental accommodation. With UK mortgage approvals also dropping, more people seem to be holding off buying and are looking to rent. Citylets traffic throughout January has been around 40% higher than in 2007 and we expect high tenant demand to continue through this quarter.

Rents across Scotland rose in the last quarter with, on average, t he highest year-on-year increases seen since we started the report. Demand for 1 bed flats in Aberdeen remained very high and once again large price increases were seen – with rents up nearly 19% on Q4 ‘06. Intriguingly though, prices for 2 bed flats in Aberdeen levelled off in Q4 bucking the trend of the previous two years.

A quarter point rate cut is expected in February and we await to see if, as in 2005, consumer and house buyers’ confidence is restored.

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