IPD has released the results for its UK Monthly Property Index for September 2008. The Index showed all property total returns falling to -2.4%, compared with -1.1% in August, making September the weakest single month since the low points of November and December last year.
Mark downs in capital values on a month-on-month basis accelerated to -2.9%, from -1.6% in August, whilst income returns remained broadly static at 0.5%. The key driver of these value movements remains yield softening (a further -2.9% increase), though rental value movements in September were negative across all sectors.
On a three-month rolling basis the pace of decline is also picking up. Total All Property returns fell to -4.8% in September from -3.9% in August. The 12-month picture has also become noticeably worse as the record falls last autumn are painfully combined with the sharp dip last month to deliver a total return for the year to September of -18.1%, the worst on record.
There was little to choose between the sectors as all three continued to slip further in September. Offices returned -2.4% compared to -1.3% in August, while Retails, at -2.6%, and Industrials, at -1.9%, both worsened relative to their previous month levels of -0.9% and -1.3% respectively.
Ian Cullen, co-founding Director of IPD, said: "The charts indicate a second dip, but the underlying numbers reveal that if the first dip was yield rather than rent driven, we are not yet through the first. Not surprisingly, however, the signs of weakening occupier demand are now becoming clearly visible."