30 May 2014, The Times
This week, Graham Beale, the chief executive of Nationwide building society, says that the London housing market may face a “natural correction”. With the property market clearly in a state of transition, we look at the effects around the country.
Sellers can no longer name their prices in prime central London (PCL), as the market is starting to cool. The Kinleigh Folkard & Hayward agency reports a 33 per cent reduction in the number of registered buyers across its 52 branches in London, with a 10 per cent increase in homes coming on to the market. Richard Barber, a partner at WA Ellis, calculates, using data from Lonres, that approximately 24 per cent of homes on the PCL market have been reduced in price. Camilla Dell, the managing partner of the Black Brick buying agency, predicts a cooling in the market for properties costing more than £2 million until the general election next year brings clarity about future property taxation costs. Average growth in PCL, according to Knight Frank, is now 7.5 per cent — below the UK average. “This is not a market on fire,” says Tom Bill, the head of London residential research at the agency. Sales are slower in the most traditionally coveted areas — Mayfair, Chelsea and Belgravia — than in the slightly less central areas of Islington, Canary Wharf and Notting Hill. This suggests that buyers have either become priced out or are fed up with the sky-high asking prices.
“Since 2009, the markets with the closest links to London have seen the strongest recovery, benefiting from a flow of housing wealth generated in the capital,” reports Sophie Chick, a research analyst at Savills agency. “Average house prices in the prime suburbs (within the M25) and the inner commute (30 minutes to an hour’s commute to London) have reached their 2007 peak levels.” On average, properties with a 30-minute commute to London have gone up by 5.2 per cent, she calculates. Those that take an hour’s commute have performed similarly, at 5.9 per cent.
“We haven’t seen a frenzy this year, but there is a steady supply of Londoners coming here and seeing how much more they can get for their money,” says Stavros Kapsalis, the manager of the Guildford branch of Hamptons International. Nuala Easter, the associate director of the St Albans branch of the agency, reports that demand is fierce for properties within half an hour’s walk of a train station and close to a good school. Recently, a five-bedroom 1930s semi which launched for £830,000 had 46 viewings on the open day, 16 offers and the sale was agreed at £950,000.
Cities and towns
Urban properties have performed much better than homes in neighbouring villages and rural locations. Research carried out by Savills shows that prime urban properties are now, on average, just 0.6 per cent below their 2007 peak, compared with their neighbours, which are still 11.23 per cent below the peak.
According to figures produced by Hamptons International, not all cities are experiencing strong property markets, however: over the past 12 months, growth in Leeds has been marginal, at 0.5 per cent. Half an hour’s drive away, in Harrogate, prices have increased by 3.7 per cent, nudging 1 per cent beyond prices at the 2007 peak. (Hunters estate agency in Harrogate reports sales volumes are up by 25 to 30 per cent year-on-year.) In Liverpool, it’s 1.1 per cent and in Manchester 2.2 per cent — in all three places, house prices are still 20 per cent below the 2007 level.
Cardiff, meanwhile, has experienced growth of 4.3 per cent and prices are 8 per cent off peak price. Amy Thomas, the head of the residential department at Savills Cardiff, reports a market that is still tough going. “We’re experiencing a buyers’ market, and vendors have to be realistic about their pricing to sell.”
The strongest performing city outside London is Cambridge, which has had 10 per cent growth in the past 12 months. In Brighton (7.2 per cent), Paul Taggart, the associate director of Hamptons International at Brighton and Hove, reports a market less frantic than it was a few months ago — more properties have come on the market, which has started to have an effect on prices. The number of people registering at the Bristol office of Knight Frank is up by 35 per cent compared to last year. James Toogood, a partner of the agency there, reports the country market around Bristol is finding “renewed strength”.
“The market is still very price and quality-sensitive, so the good is going, but the bad and ugly are not,” says Robin Gould, a buying agent who covers Wiltshire, Dorset, Somerset, Hampshire and Devon for Prime Purchase. He observes that second-home buyers in these areas are rare. James Wilson, a director of Jackson-Stops & Staff at Shaftesbury, says: “It’s a far cry from the frenetic market that London and some of the southeast is experiencing.”
Knight Frank reports that growth in Dorset is 1.9 per cent, in North Yorkshire it’s 3.2 per cent and Lincolnshire 4.7 per cent. Prime rural properties grew by 4.1 per cent in the past 12 months, compared with the 8.2 per cent achieved by prime urban ones, according to Grainne Gilmore, head of UK residential research at Knight Frank.
These are taking the longest time to recover: prices in Cornwall are subdued, with a growth of 1.7 per cent over the past 12 months, according to Hamptons International. In Blackpool, prices have fallen by 1.2 per cent. Prices in Poole have grown 5.3 per cent; those in Barnstaple have flatlined at 0 per cent. “The second-home market hasn’t recovered as quickly as the mainstream market,” says Chick, who also points out that the prime coastal hotspots were some of the areas hit hardest by the credit crunch — by mid-2013 they were still 26 per cent below their peak.