04 Jul Regional prime property markets in the UK starting to shows signs of recovery
Whilst prices in the prime London markets showed 2.5% growth in the second quarter of 2013, this was not the case for the prime regional markets. However, there were encouraging signs that prices in the regions have started to or, are near to, recovery, according to the latest property market report from Savills.
The prime suburban markets, where prices now average £440 per square foot, have by and large proved to be the strongest. This is particularly the case in Elmbridge, where a flow of wealth down the A3 corridor means that prices are 6.6% above their 2007 peak.
In this market the private estates of Wentworth and St Georges Hill have performed particularly well with prices on average 20% above their pre-crunch level. This is supported by robust transactions in the first part of the year, reflecting the continued high levels of international demand, which show parallels with central London.
Within the commuter zone the town markets are the strongest with locations such as Cambridge, Oxford, Winchester and Bishop’s Stortford all having exceeded their 2007 peaks. These well established locations are critically are within an hour of London by rail and offer a variety of highly rated schooling and are showing positive growth of 1.9% to date this year.
However, village and rural properties across the prime regional markets have struggled to match this performance, with an emerging preference for prime urban property.
Generally, the report shows that there has been a significant divergence between the commuter zone and the area beyond, even in the South of England, but in the last quarter some modest signs of price growth have occurred in these areas. This has been most marked in the more established prime country markets including Bath and the Cotswolds.
An analysis looking at the Cotswolds compared with coastal markets clearly shows there is a continued weak demand for second homes and or discretionary purchases, some of which now offer real value.
By contrast the Cotswolds, which has accessibility to London, a range of schools and good family housing stock is back in favour. Deals are taking place and values increased by 2.1% during the second quarter if the year, leaving the gap since peak at around 10%.
The coastal market however, remains overpriced in some areas partly due to scarcity and continues to suffer from a lack of buyers. Average values fell by 2.4% in the second quarter and are still 26% off peak.
The report also shows that the prime country house market in Scotland is suffering from similar issues having been through a period of significant price adjustment, that makes it look like very good value compared to the rest of the prime UK market.
‘At the beginning of the year we anticipated that 2013 would mark a turning point in the prime regional markets, with the gap between prices in the prime markets in the capital drawing demand out of London. This has been slow to materialise meaning the gap has widened further,’ said Lucian Cook, director of Savills residential research.
‘With confidence in the economy and the wider housing market improving against the backdrop of continued low interest rates, we believe that the next 12 months will see a return to more consistent house price growth in the prime markets beyond the capital, though the market is likely to remain highly seasonal,’ he added.