UK sales of commercial property plunged in Q4 2007 because of credit crunch; Market set for biggest annual losses in more than 25 years

FinFacts reports:

The value of transactions fell from £15bn in the third quarter to £5.5bn in the fourth, according to data provider Property Data. The dismal figures contrasted sharply with £20.1bn value of deals that were transacted in the last three months of 2006.

The last time quarterly sales dipped below £5.5bn was in 2002, during the traditionally low activity first three months.

According to IPD (Investment Property Databank), a leading index provider for commercial property, prices have fallen by nearly 10% since their peak last summer. IPD says that owners may record losses of at least 11% in 2008, according to prices of derivatives contracts pegged to indexes its maintains.

The fall would be the largest since IPD introduced its annual total-return index in 1981, which combines data for rental incomes and changes to appraisal values. The benchmark index covers £200 billion of investments and excludes debt, which can multiply property gains or losses.