Fore­cast for house prices in York­shire is mixed

Sav­ills has pub­lished its five-year fore­cast for the prop­erty mar­ket and it re­veals a North-south di­vide. Sharon Dale re­ports.

Yorkshire Post - Property - - PROPERTY -

IT’S been a de­pressed five years for the prop­erty mar­ket thanks to the com­bined ef­fects of the credit crunch and the re­ces­sion and Sav­ills lat­est pre­dic­tions do lit­tle to lift the spir­its.

Its five-year fore­cast re­veals a stark North-South di­vide with prices in York­shire lin­ger­ing next to the bot­tom of its league ta­ble.

While Lon­don will see a 21 per cent growth in house prices by 2017, York­shire may only man­age 5.5 per cent, only marginally bet­ter than the North East, which is expected to see a 4.5 per cent in­crease.

Av­er­age house prices should start to look more sta­ble in 2013 but will strug­gle to show in­fla­tion­beat­ing growth for the fore­see­able fu­ture.

Hav­ing fallen by an av­er­age –2.0 per cent this year, the firm says that the av­er­age UK house price will in­crease by just 0.5 per cent in 2013 and a fur­ther 1.5 per cent in 2014, with growth to­talling 11.5 per cent over the next five years. But, Sav­ills add that this head­line 11.5 per cent av­er­age price rise will equate to falls of around three per cent, af­ter ad­just­ment for in­fla­tion.

“Last year we fore­cast that prices would fall by –2.0 per cent and that in­fla­tion rather than price falls would continue to strip out value there­after,” says Lucian Cook, Sav­ills res­i­den­tial re­search di­rec­tor. “This year we have seen av­er­age val­ues fall in real terms. We now ex­pect the mar­ket to show slight nom­i­nal growth next year, but re­main neg­a­tive in in­fla­tion-ad­justed terms un­til 2016.”

He ex­plains that the main­stream mar­ket con­tin­ues to ad­just to weak eco­nomic growth and the long-last­ing ef­fect of the credit crunch.

“For real, in­fla­tion-ad­justed house price growth to ex­tend be­yond Lon­don and the top tiers of the mar­ket, we need a sus­tained and wide­spread im­prove­ment in house­hold in­comes fu­elled by a stronger eco­nomic re­cov­ery than we have seen to date,” says Lucian.

Trans­ac­tion lev­els are expected to rise grad­u­ally to reach al­most 1.17 mil­lion, up one-third from their av­er­age in the years since the credit crunch, but still 28 per cent be­low the pre-peak norm.

In York­shire, there have been price falls of three per cent this year. The fore­cast is for a stag­nant 2013 with no growth, a drop of 0.5 per cent in 2014, a rise of 0.5 per cent in 2015, a 2.5 per cent in­crease in 2016 and a three per cent rise in 2017.

“There have been wide ge­o­graph­i­cal dif­fer­ences in the per­for­mance of the hous­ing mar­ket in the past five years, a trend which is mir­rored across York­shire. The over­all legacy of the credit crunch con­tin­ues to shape the mar­ket. So con­strained lend­ing con­di­tions, a slow eco­nomic re­cov­ery and cus­tomer sen­ti­ment all continue to be key driv­ers,” says Lucian.

“Whether or not prop­er­ties are in an eq­uity rich area, where buy­ers have ac­cess to fi­nance, is all im­por­tant. We ex­pect this ‘lo­ca­tion is king’ ten­dency to continue over the next five years.

“Across York­shire, we are fore­cast­ing a main­stream growth of 5.5 per cent un­til 2017, how­ever we would ex­pect those eq­uity rich mar­kets like York, Har­ro­gate and the Leeds sub­urbs to out­per­form more mort­gage reliant mar­kets such as Hull, Brad­ford and Don­caster. Like­wise, the pop­u­lar vil­lages such as those in the Howar­dian Hills, around York, Leeds and closer to Har­ro­gate will also continue to fare bet­ter than oth­ers in less sought-af­ter lo­ca­tions. There will still be an over­all flight to qual­ity, whether it be due to lo­ca­tion or prop­erty type, which has been wit­nessed across all re­gions of the UK in the last few years.”

Ben Prid­den at Sav­ills York says prime prop­erty has been most af­fected by a lack of con­sumer con­fi­dence.

“There have been ex­cep­tions to this. We have sold three homes over £2m re­cently and that is a part of the mar­ket that has been se­verely ham­pered in York­shire since 2007.

“Our ex­pe­ri­ence on the ground also mir­rors the lat­est re­search find­ings and fore­casts. In fact of the seven sales agreed in the last six weeks from the York of­fice, five of them have been ei­ther within York city cen­tre or in the de­sir­able ar­eas to the North of York.”

An­other sig­nif­i­cant legacy of the credit crunch is the division be­tween dif­fer­ent buyer groups and tiers of the mar­ket. The un­der 35s now con­trol less than four per cent of the hous­ing wealth in the owner-oc­cu­pied sec­tor, while the over 55s own over twothirds, cre­at­ing a chasm be­tween the dif­fer­ent gen­er­a­tions and their abil­ity to trade in a debt­con­strained hous­ing mar­ket.

Sav­ills es­ti­mates that the amount of hous­ing wealth held by the un­der 35s will fall by 24 per cent over the next five years and the trend to rent will continue.

“Sales vol­umes in the sub £250,000 price bands will continue to be sup­pressed by a lack of mort­gage ac­tiv­ity, and are expected to in­crease by no more than a third over the next five years,” says Lucian. “This is still just over two-thirds of peak 2007 turnover lev­els.”

Pre­dicted Price Rises 20122017. UK av­er­age: 11.5 per cent; Lon­don 21 per cent; South East 19.5 per cent; East of Eng­land 17 per cent; South­west 15.5 per cent; East Mid­lands 13 per cent; Wales 11.5 per cent; West Mid­lands 7.5 per cent; North­west 6 per cent; Scot­land 6 per cent; York­shire 5.5 per cent; North East 4.5 per cent.

CHAN­NEL CROSS­ING: The house is English on the out­side but boasts a French-in­spired in­te­rior. The prop­erty is in one of York’s most sought-af­ter lo­ca­tions.

POS­I­TIVE SIGNS: House sales will in­crease over the next five years

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.