Play it safe and in­vest in the best lo­ca­tions, say Sav­ills

Yorkshire Post - Property - - PROPERTY - Sharon Dale

A SHIFT in buy­ing power from younger, debt-driven pur­chasers to those with equity, will lead to sev­eral last­ing changes to the York­shire hous­ing mar­ket, ac­cord­ing to Mar­cus Dixon, an as­so­ciate di­rec­tor at Sav­ills.

Speak­ing at a prop­erty seminar in Leeds, hosted by Sav­ills this week, Mr Dixon also ad­vised that any­one look­ing to in­vest over the next five years should buy in well-es­tab­lished and pop­u­lar ar­eas.

York, Har­ro­gate and Ripon to­gether with the ever pop­u­lar vil­lages in the Howar­dian Hills and the sought-af­ter sub­urbs such as Scar­croft, in Leeds, of­fer ex­cel­lent po­ten­tial.

“Sav­ills is find­ing that de­spite con­tin­u­ally low trans­ac­tion lev­els, most buy­ers in the mar­ket to­day are equity rich, cash buy­ers with no need for mort­gage fi­nance.

“It seems com­mon sense but the ar­eas that will bounce back first are those where prices and trans­ac­tions have re­mained the most sta­ble in the last few years,” he says.

So who holds the prop­erty purse strings?

Ac­cord­ing to Sav­ills, 83 per cent of equity is held by home own­ers over 45, with more than 40 per cent of these home­own­ers over 65.

Lack of fi­nance for oth­ers who need a larger mort­gage is still the big­gest fac­tor af­fect­ing house prices.

“Low equity mar­kets, where buy­ers rely on mort­gages to pur­chase their prop­er­ties, are strug­gling to re­cover, whereas higher equity mar­kets, such as those in Har­ro­gate, York and the well-es­tab­lished vil­lages in North York­shire, re­main buoy­ant,” says Mr Dixon.

“How­ever, there are mas­sive dis­par­i­ties be­tween dif­fer­ent ar­eas within the coun­try and within the York­shire re­gion. For ex­am­ple, North York­shire re­mains one of the places where the prime mar­ket is still rel­a­tively ac­tive when com­pared to level of sales and val­ues be­fore 2007.

“The les­son is that those want­ing to make money from a hous­ing in­vest­ment over the next five years should look to buy the best pos­si­ble prop­erty in one of the best ar­eas they can af­ford.

“That way, the area should re­cover fastest and you can re­alise your in­vest­ment more quickly than you would if you bought in an area that may take longer to pull through.

“Prices in ar­eas where a lack of mort­gage fi­nance com­bines with low lev­els of de­mand will still take longer to bounce back.”

Sav­ills’ price fore­casts pre­dict it will be a few years be­fore things start to re­cover.

“Over­all, UK house prices are start­ing to come through the much mooted sec­ond slip. Fig­ures are still in neg­a­tive growth but prices are con­tin­u­ing to im­prove,” says Mr Dixon.

“Cur­rently, we’re pre­dict­ing that across the York­shire & Hum­ber re­gion the hous­ing mar­ket will grow by 1.7 per cent be­tween this year and 2015, al­though most of that growth will hap­pen in 2014 and 2015.

“Slow eco­nomic re­cov­ery, ab­nor­mally low in­ter­est rates and low trans­ac­tion lev­els will con­tinue to drive ge­o­graph­i­cal dif­fer­ences in house price re­cov­ery.

“There will also be a marked dif­fer­ence be­tween the type and grade of prop­erty which will also change the shape of the mar­ket.”

Sav­ills say there will be a huge in­crease in pri­vate rent­ing in the lower tiers of the hous­ing mar­ket, with one in five UK homes be­ing rented by 2016.

They be­lieve that a short­age in sup­ply of these homes will lead to rental in­come growth, which, in turn, should at­tract cash-rich in­vestors and in­sti­tu­tions into that mar­ket.

Mean­while, a re­port by CBRE Richard El­lis iden­ti­fies Har­ro­gate, Skip­ton and Rich­mond ar­eas of York­shire as de­vel­op­ment hotspots.

These are among just a hand­ful of ar­eas with a low level of house­build­ing, high price growth and good em­ploy­ment prospects out­side Lon­don and the South­East that are seen as a good bet for de­vel­op­ers.

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