Author: Peter Coles
The UK economy is starting to show signs of recovery but what does this mean for the housing market? Romans explored results from the last few years, focusing on property valuations and what changes there have been specifically across Berkshire, Hampshire and Surrey.
Property values depend on the quality of a house or flat, its location and more importantly what a potential buyer will pay for it. There is no doubt that property valuations have reflected the effect that the recession has had on affordability.
The north-south housing divide
Although house prices are now rising in all UK regions, in terms of regional differences, London continues to dominate the pricing scene; effecting statistics for the whole of the UK. In a recent House Price Index from the Land Registry, the average price of property in Greater London was £475,940, a 3.9% increase compared to the year before. Predictions for 2012-2014 indicate that house price growth is expected in London and the South East, for example in Berkshire, Hampshire and Surrey, and also in Northern Ireland (1).
In June 2013, London property prices were approximately 10% higher than their pre-crash level, however, in the South East they remained 10% below their pre-crash peak and in the North East prices are still almost 25% below their pre-crash value (2).
South East of England
While some of the national trends are mirrored in the South East of England, there are a few additional surprises here in terms of property valuations, which averaged £281,148 overall in the quarter April – June 2013, 16% higher than the UK national average. This is only an annual increase of 0.3% but, a quarterly increase of 2.7% suggesting that house prices in the South East are on the rise (1).
Property prices in Surrey averaged £419,957 in June 2013, an increase of 0.3% on June 2012 prices. Across the borough of Surrey Heath, including Camberley, a significant quarterly increase of 12.7% meant that house prices rose to an average of £368,639 between April and June 2013. The majority of house sales in Surrey during April – June 2013 were in Elmbridge, averaging £651,062 across all property types, an annual increase of +4.5%. Average prices for semi-detached houses in Elmbridge climbed to £525,808 while those for detached dwellings reached £1,184,472 (1).
The largest annual house price increase of 9.7% was in Spelthorne where average property prices reached £306,182. In June 2013 property values in Wokingham reflected a comfortable average of £311,508 and detached homes were attracting an average of £429,507 (1).
Property values in Hampshire averaged £269,801 in June 2013 with a detached property average of £404,367.
Interestingly, the average house price in June 2012 was exactly the same for this region (3).
A majority of the house sales in Basingstoke during April – June 2013, were for terraced properties. Terraced houses in Basingstoke were the most popular type of property to sell, with a 6% increase in price from October 2012 to October 2013; increasing from £188,206 to £199,587. In the same period, detached properties sold for an average price of £381,470, up 1% from £378,405 in October 2012, and semi-detached properties averaged £223,410, slightly down from £233,107 the previous year. The number of property sales of terraced and semi-detached houses showed a significant increase during the same period – up 34% and 30% respectively. While the number of flats that sold in Basingstoke decreased by 37% (3).
In June 2013 property values in the Royal Borough of Windsor and Maidenhead topped the list of property values in the South East, achieving an average of £444,558 across all types of properties. This soared to £775,787 for a detached house, very close to the high value property threshold of £800,000, and even a flat in the area achieved an average property value of £278,245, also well above the UK average (1).
Affordable housing continued to be available in Reading where the average house price in the quarter April -June 2013 was £226,790. Sales of detached houses averaged £419,547 while semi-detached houses sold at an average price of £276,894 (1).
Just 11 miles south-east of Reading the Borough of Bracknell Forest saw an average house price across all types of properties of £286,566 from April – June 2013. This is an increase of 5% on the previous year and a quarterly change of +9.6%. Detached houses fetched an average of £464,334 – an impressive annual increase of 14.6% (1).
Affordability and property valuations
Affordability remains an issue in the South East, however looking back over the last 30 years it is still far better at present than the long-term average levels. In November 2013 reports stated that property valuations had soared during the previous 12 months and that they had risen at the fastest rate since May 2010. Property values in Windsor featured among those predicted to experience price rises of almost a third by 2018; the housing market here is one of the most vibrant and buoyant in the UK. For the first time in more than 10 years property values in the South East are set to outpace those in the capital (2).
High value property and house prices nationwide
While there are signs that sales of properties valued under £800,000 may continue to remain static for a while across the UK as a whole, Land Registry statistics indicate that transactions of high-value properties have consistently outperformed others since 2012. This may reflect a reduction in the number of high-value transactions being registered to companies, as these now attract stamp duty at 15% and are excluded from Land Registry statistics (4).
Across the UK house prices have grown by an average of 9% since 2008 although, when adjustments are made for inflation, they have remained below their pre-crash peak. By 2018 London prices are predicted to rise by approximately 24.4%, less than the national average of 25% across the UK and considerably less than the South East, where property values are predicted to increase by 32%. Although London prices are the only ones to have fully recovered their pre-crash value, the South East appears to be on the cusp of an upward surge in property values during the next four years (2).
Romans’ Group Managing Director, Peter Coles, said in his 2014 property predictions that he believes house prices will increase throughout 2014 but the most significant increases will be in one and two bedroom properties: “This will be due to increased demand from first time buyers, aided by the Help to Buy schemes and Buy to Let investors.”
(1) The Land Registry of England and Wales
(2) Savills Research
(3) home.co.uk – House Price Report for Basingstoke
(4) Capital Economics – The UK Housing Market Analyst
(5) Xit2 Report
(6) Nationwide House Price Index
(7) Markit/CIPS – Purchasing Managers’ Index (PMI)