A new housing market star was born in 2017, eclipsing London and the southeast where the market has been in slowdown for months in some locations and at a standstill in others. The rise of the East Midlands represents a reconfiguring of conditions; a gap between the north-south may remain, but it is a little narrower than before.
The south has long been the dominant player, with annual increases of 9 per cent being the norm in the capital, but stretched affordability means that buyers are looking to areas where it is easier to clamber on to the ladder, or scale the steps. Lucian Cook, the head of research at Savills, says: “Markets in the East Midlands such as Leicester, Wellingborough and Rutland are among only nine local authorities across England and Wales that have had double-digit house price growth this year.
David Fell, a researcher at Countrywide, the estate agency, says: “The changing profile of buyers and a pick-up in seller sentiment have driven price growth across the Midlands and the north this year. First-time buyers have filled the gap left by landlords, while investors who would have bought down south two years ago have headed north.”
This is one of the big success stories of 2017. House prices are up 6.9 per cent, according to Savills, as London professionals look north for cheaper homes. Hamptons International highlights Wellingborough and East Northamptonshire as hotspots. Jon Wright of Taylors, the estate agency, says: “Wellingborough has upgraded its train station, which has a direct line into London St Pancras.” Rutland, England’s smallest historic county, offers a cheaper alternative to the Cotswolds. James Abbott, the head of office at Savills Stamford, says: “We have seen more buyers moving to the area from London and the southeast because of the great choice of schooling, and excellent train routes into London from Peterborough in Cambridgeshire, Corby in Northamptonshire, and Grantham in Lincolnshire, make it possible to live here, but work in the south.”
Birmingham remains popular, as high London house prices push out young professionals, and investors bet on the power of HS2, the high-speed link to London due to open in 2026. Prices in Ladywood, a central area recently named one of the poorest places in the UK, rose 17 per cent in the 12 months to July, according to Barclays. There has also been a ripple effect outside the city. Tony Morris-Eyton, of Savills, says: “Now that the London market has softened, buyers are prepared to make a move to counties such as Shropshire.”
Strutt & Parker’s Ludlow office has had a 30 per cent increase in the number of houses sold year-on-year, driven by an increase in young family buyers from the southeast keen on the area’s schools. Shrewsbury in Shropshire and Hereford in Herefordshire have become university towns in the past few years, boosting young buyer interest.
Prices of countryside properties across the UK have remained relatively stagnant this year because of a lack of buyers. Yet in Yorkshire this sector is doing rather well. There are more transactions of country homes here than in any other northern county, according to Savills. Georgian houses are the most desired, says Luke Morgan, of Strutt & Parker. “People love their symmetry and proportions. This year I have had more buyers ask me for houses with long tree-lined driveways and privacy — the idea of a grand entrance and private land either side to ensure their piece of England is protected.” However, price growth in Yorkshire in general has been slow, except in York city.
Northeast and northwest
House prices in the northeast are not past their pre-crisis peak, but they are on the move. Price growth rose 3.1 per cent compared with 1.9 per cent the year before, according to Savills. In the northwest prices rose 3.9 per cent, a fall from the previous year’s 5 per cent, despite high growth in places such as Trafford, which rose 9.1 per cent. Manchester also rose 8.6 per cent, with continuing benefits from development and overseas investor interest in Salford. Burnley, a market town in Lancashire, 20 miles north of Manchester, experienced the second-highest house-price growth in the country, according to Hamptons International, at 14 per cent. Its average house price is £91,465, so possibly a good spot for investors. Sarah Watson, of the estate agency Entwistle Green in Burnley, says there has been a big increase in investors buying this year. “A direct train line from Burnley to Manchester has recently opened making Burnley ideal for commuters who cannot afford to buy in Manchester city centre.”
Aberdeenshire is one of the worst places for house price growth in the UK, according to Hamptons International. It has not been a total disaster for Scotland, though. Strutt & Parker says that houses are selling faster in Edinburgh than anywhere else in the UK, averaging 41 days on the market. Non-residential purchases have become popular, because they are subject to lower LBTT rates (the Scottish version of stamp duty). Farther afield, the Highlands proves an unlikely hotspot. Suzanne Moss, an associate in Strutt & Parker’s Inverness office, says: “We have had some very successful high-value sales amid a shortage of supply. Properties in Inverness city centre have proved particularly sought after. We also launched a £1 million Black Isle property in November that went under offer within two weeks. The level of interest we have seen in premium properties, perhaps due to a shortage of supply, has been very encouraging.”
London and southeast
The capital has been the UK’s worst-performing region in terms of price growth, dropping from 9 per cent to 2 per cent in the year to September, according to Savills; prime central London prices in particular have declined. Previously it was thought that much of the downward pressure resulting from the Brexit vote would have passed by now, but prices in the high-value brackets (over £2 million) have continued to fall. Borrowers in the capital have not only become more cautious in light of political and economic uncertainty, but have also come up against greater borrowing restrictions.
Cook says: “This time last year annual house-price growth was in double-digit territory in 19 of London’s 33 boroughs. Now it is only over 4 per cent in Barking & Dagenham in east London (6.7 per cent), Bexley in southeast London (5.8 per cent), Greenwich in southeast London (5 per cent) and the City of London market (4.7 per cent). The decimal point has essentially moved one place to the left in the London borough of Newham, where prices dropped from 16 per cent to 1.6 per cent.”
Fell says: “More would-be buyers with smaller budgets and fewer with larger ones have created a two-speed market. In London it takes three times as long to sell a £1 million home than one worth half as much, a gap that has steadily widened over the year.”
The slowdown in London has rippled into the commuter zone, with levels of house price growth halving in the east and southeast to 5.8 per cent and 4.1 per cent respectively. Yet markets such as Dover, Medway and Thanet in Kent, Hastings in East Sussex, and Colchester and Southend in Essex, are still in rude health. The weakest spots have been a mix of London boroughs, commuter towns such as Woking in Surrey and Bracknell in Berkshire, and places such as Blackburn in Lancashire and Hartlepool in Durham.
In Beeston, Cheshire, this six-bedroom house is on sale for £1.65 million with Strutt & ParkerSouthwest
Valuable market players this year included Stroud in Gloucestershire, west Somerset and Christchurch in Dorset, which experienced strong house price growth. “The general trend has been a shortage of property and growing demand,” says Keith Thornton, the sales manager of Palmer Snell in Christchurch. “There have been fewer investors and more first-time buyers taking advantage of the Help to Buy scheme, driving the market in these areas.” Richard Speedy, the head of Strutt & Parker’s waterside department and Exeter office, says there has also been a spike in interest from Londoners looking for coastal properties.
Traditionally the region’s towns have thrived off affordability and excellent schools, but there are indications of a slowdown — annual house price growth has dropped from 12.1 per cent to 5.8 per cent, according to Savills. One of the more favoured locations has been Mid Suffolk, with homes averaging £274,283, according to the Land Registry and Hamptons International. Forest Heath in Suffolk and Tendring in north Essex have also bucked the regional trend.
BNP Paribas’s forecast suggests that prices in East Anglia will dip again next year, before rising in 2019.
Savills reports a slight dip in price growth in Wales, from 4.7 per cent to 4.2 per cent; Carmarthenshire has been one of the worst performers. According to Anthony Clay, the head of Knight Frank in Cardiff, the hotspots remain South Monmouthshire (halfway between Bristol and Cardiff it is well-placed for commuters, and journeys to Bristol will become cheaper next year when tolls on the Severn crossings are abolished); Cardiff (a number of office developments and relocated businesses have boosted the market for apartments); and the popular holiday towns in Pembrokeshire. Stamp duty is being replaced by the Welsh government’s new land transaction tax from April; the tax will be waived, however, when buying a home up to £180,000, a boon for first-time buyers.
Northern Ireland experienced a particularly traumatic recession and the top-end of its housing market is still recovering. Beth Robinson, a senior partner at the estate agency Templeton Robinson, says: “Prices at that end equate to what they were in 2005; the sector for properties between £800,000 and £1.5 million is still underperforming.” Second-home owners and first-time buyers have kept other parts of the market ticking along, and agents say that the overall turnover of sales has been significantly higher this year than last in parts of Belfast, such as Ballyhackamore, North Down and Armagh. There has also been an uptick in sales within the new homes sector, which was slow to get off the ground after the recession.
Source: The Times
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