Property continues its decline, rental growth slows, IPD shows (UK)

IPD has released the results for its UK Monthly Property Index for July 2008. The Index showed all property total returns fell to -1.3% in July 2008, just slightly less than in the preceding month when all property total returns stood at -1.5%.

The pace of decline in capital growth also slowed marginally to -1.8% from -2.0% in June. Still, this remains substantially worse than in May, when capital values fell by -1.2%. The pace, though marginally slower on a monthly basis, still remains fast when viewed in a longer historical context.

Income return remained unchanged at 0.5% m/m. All Property rental growth, however, turned more negative, and the -0.1% fall in the month represented a 60 basis points deterioration compared with June, suggesting that landlords will be having more difficulty in pushing through rent increases.

On a rolling 12-month basis the all property total return has now hit an all time record low at -16.1%. Aside from the past 12-month period, the worst annual return record for the monthly index occurred in April 1991, when the index recorded an annualised rate of -8.1%.

All sectors edged lower in July. Offices slid to -1.1%, while Retails and Industrials also worsened, to -1.5% and -1.4% respectively.

Ian Cullen, Director and co-founder of IPD, said: "July was the first month of this downturn in which all three sectors reported negative rental value movements. These movements were still all very small, however, and the downward pressure on capital values remains overwhelmingly the same as it was a year ago

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