Market Report – south east England
A Glance At 2009Property plays a vital role in the British economy and is frequently a hot topic for debate at dinner parties across the country. House prices underpin consumer spending, which accounts for about two-thirds of Britain’s growth. Housing has also become an important barometer of the state of the economy and house price falls make front page headlines. At the beginning of 2009 most commentators were predicting further house prices falls, continuing on from 2008 but strangely this has not been the case. 2009 started with prices in freefall but during the past six to eight months London and the South East have led a strong recovery for UK house prices and average house price growth could reach 5% by the end of the year. The recent pick up in house prices is based on fragile economic fundamentals such as a weak pound, which has driven overseas demand and a boost from the stock market recovery, both of which are unlikely to be supportive in 2010. In addition, the shortage of quality residential stock has aided this somewhat unexpected increase.
The government has a target of building 240,000 homes a year, but the construction industry is in a recession and the number of new houses coming onto the market is likely to be very low. Due to the time lags involved in building houses, this is creating a shortage of housing which will be a problem when the housing market recovers. The government will also be phasing out the stamp duty holiday for properties in the £125,000 to £175,000 bracket by the end of the year which may have a negative effect.
There are signs that the upward trend is slowing. The three monthly growth rate, which is generally considered to be a smoother indicator of the underlying trend, also moderated to 2.8% in November, down from 3.5% in October and 3.8% in September. The rate of increase in new buyers also looks to be easing according to the latest RICS housing market survey. That said, 2009 has proved to be much less of a headache than first anticipated and will end on a positive note, down circa 13% from the market peak.
What’s In Store For 2010
Hardly anyone seems to know what is going on just now, let alone be able to explain it. By studying the past, we can get a good idea of how the market is going to unfold each year. The recent monthly rises are slowing and will continue to do so in 2010. It would be wrong to expect a continuation of the current recovery as the economy is not in a position to permit this in the short-term. During this period of increases we have seen cash-rich investors and bargain hunters as the main players buying up property, but the market requires mortgaged purchasers to sustain the process – with lending extremely tight, unless you have a 40% deposit, a good job and a great credit history we are likely to see prices decrease again through 2010.
There are a number of factors that will determine the state of the market in 2010 and the impending General Election is likely to refocus business and consumer minds on the extent of financial and economic trauma the UK is in and may lead to slower and weaker confidence in the housing markets. Other factors include expected further increases in unemployment, the rise in VAT in January and the diminishing impact of quantitative easing. It is difficult to place a figure on the magnitude of anticipated price fall but our best estimate is that of 6% to 10%, which would give a total decrease of circa 19% to 23% from the peak of the market. Given the shortage of housing in the UK, the nature of housing market cycles and the UK’s belief in the long-term prospects for house prices the upturn expected from 2011 onward could quite easily be stronger than forecast.
Overseas buyers have retained their share of the market, many with cash purchases due to the weak pound. One noticeable change has been the spread of nationalities buying, which seems to be ever widening. In addition to the traditional European, American and Russian buyers, London and the South East have seen demand from South Africa, Nigeria and India, not to mention the Chinese who are beginning to make their mark.
Where To Buy In 2010
With all the confusion surrounding the housing market in the UK it is difficult to know how to predict when the recovery might start and where will be the next hot spot. The traditional view of property investment in a downturn is that you should go for the most expensive, well-established areas rather than speculating in new areas where investment seeps away like the sea retreating down the beach after high tide. Areas that benefit from good transport links, excellent schools and a strong local labour market are prime candidates.
Places To Consider in 2010
Amersham, Buckinghamshire
Wealthy Chiltern town surrounded by pretty countryside, it is an historic old town with a jumble of period styles. Dr Challoner’s Grammar and High School’s have served the town since 1624. Situated just outside the M25 it is the last stop on the Metropolitan Line on London Underground and is 35 minutes to Marylebone by train.
Ascot, Berkshire
A small town with attitude situated west of London with easy access to Windsor and Heathrow Airport. Once the playground of Kings, there is golf at Wentworth and Royal Ascot Golf Clubs, racing at Ascot and Windsor, polo at the Royal Berkshire Polo Club and sailing on the Thames. There are prestigious mansions and private schools to match.
Beaconsfield, Buckinghamshire
Prime commuter territory nestling in the Chilterns, close to the M40 and only half an hour by train to Marylebone. It attracts high flyers – city commuters and creative types who come for the National Film and Television School. High performing Bucks grammar schools produce results.
Burford, Oxfordshire
Forming part of the ‘golden triangle’ of the Cotswold property market, Burford’s high street slopes down from the Wolds to the River Windrush. It is close to Oxford for shopping and its stone houses line the little side streets. In April 2009 Burford was ranked sixth in US business magazine Forbes magazine's list of "Europe's Most Idyllic Places To Live".
Harpenden, Hertfordshire
Situated conveniently close to the M1 and only 25 minutes by train to Kings Cross Thameslink, makes it a great choice for commuters. Harpenden has excellent schools and a lovely tree-lined high street with an extensive range of national chains and independent boutiques. One notable feature of the town is its abundant parks and commons. There are plenty of golf courses and various sports clubs.
Lyndhurst, Hampshire
One of the New Forest towns that have become popular with media types who are drawn to the ancient landscape, where clear rivers and shady groves provide tranquillity for walking, cycling and horse riding. London’s Waterloo is 75 minutes by train.
Oxford, Oxfordshire
Oxford is a city of great beauty, culture and quality of life and is probably the only city in England, other than London, where properties regularly sell in excess of £1m. Houses within a 15-minute radius of Oxford with an easy school-run command a premium. Residential Oxford is predominantly Victorian and the city is teeming with trendy young professional and city workers who maintain a high demand for property.
Sevenoaks, Kent
Just half an hour by train to Charing Cross and in the Heart of Kent, Sevenoaks has good shops and entertainment and a hoard of lovely villages in its catchment. There are a number of independent educational establishments in the town, including Sevenoaks School, one of Britain’s leading independent schools. Sevenoaks is a great location for those looking for homes which provide easy access to the continent.
© Paul Peattie
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