UK property returns still falling - IPD

The IPD's UK Monthly Property Index saw a total return of -0.7% month-on-month in May 2008, slightly lower than the -0.5% return in April, but still continuing the broadly upward trend since the -3.7% return in December 2007.

Capital growth fell marginally, from -1.0% in April to -1.2% in May, while income return remained unchanged at 0.5% month-on-month. On a 12-month basis, however, the all property total return hit a record low of -13% in May, down from -11.7% in April, as the relatively strong months of the first half of last year are successively dropped from the calculation.

Of the three sectors, Industrials took first place, with a month-on-month total return of -0.5%, followed closely by Retails, at -0.7%, with Offices suffering the sharpest fall in values and so dropping down to third place recording a return of -0.9%.

'After eleven months of falling capital values, May 2008 also registered a very small fall in rental values; the first month that both the yield and rent drivers of capital value growth have been pushing in the same downward direction,' said Malcolm Frodsham, research director at IPD.