The Daily Telegraph - Saturday - Money
Where house prices can still rise
Higher mortgage rates and energy prices will hit property values – but these neighbourhoods will be able to weather the storm, writes Melissa Lawford
‘Half of our market is first-time buyers, and most have help from the Bank of Mum and Dad’
The cost of living crisis and rising interest rates will hit buying power hard, leading to a dramatic slowdown in house price growth.
But there are pockets around the country that will buck this trend.
To find the neighbourhoods with untapped potential for price rises this year, Hamptons estate agents analysed the postcodes that have the biggest value gaps between the most expensive quartile of houses compared with the cheapest quartile.
In the North East, in Hartlepool’s TS26 postcode, which extends from the western side of the town centre into the countryside, the average property in the cheapest quartile of houses cost £53,000. This was £166,800 less than the typical price in the most expensive quartile of properties – a value gap of 314pc.
Lottie Appleby, of Manners & Harrison estate agents in Hartlepool, said the area around Bishop Cuthbert, in the north of TS26, is particularly popular, while the area around Hart Lane is significantly cheaper.
Prices are rising rapidly, driven by a wave of first-time buyers moving up from the south of England chasing relative value for money and a coastal lifestyle, said Ms Appleby. She estimated this group of relocators accounts for 60pc of Hartlepool’s first- time buyer market.
“They are coming with much bigger budgets, up to £400,000. Before, no first-time buyer was spending more than £ 200,000 or £ 150,000,” said Ms Appleby.
Values are up by a third since the start of the pandemic. A three-bedroom semidetached house that would have cost £150,000 will now sell for £200,000. There is an extreme shortage of supply.
“Normally we would have a couple of hundred properties for sale. Right now we only have 90,” she said. “For every house that we list we have 10 buyers, and best and final offers are common.”
A house listed at £280,000 in Headland, a small peninsula on Hartlepool’s coastline, sold last month to a firsttime buyer from London for £310,000, 10.7pc more than its asking price, said Ms Appleby.
Another key indicator for growth capacity is how close an area’s average house price is to its pre-financial crisis peak. The average home in Hartlepool cost £ 130,200 in 2021, according to Hamptons. This was still 2pc less than the average price 14 years earlier in 2007.
It is one of just three local authorities in the country where values have still not yet recovered to their pre-crash peak. The other two were Inverclyde, on the coast west of Glasgow, where prices were down 1.7pc compared with 2007, and Aberdeen, where house prices are effectively tied to the oil price. Here, prices are still down by 12pc.
But there were 15 local authorities where prices only just exceeded 2007 levels following rapid price growth in 2021, including Darlington, Redcar and Cleveland, and Blackpool. These were concentrated almost exclusively in the north of England. Several of these areas also have some of the largest price differences between the top and bottom quartiles, including the Ribble Valley in Lancashire, which encompasses Great Harwood’s BB6 postcode, where the gap was 208pc.
Yet many of the areas with the biggest differences in price are also in the most expensive parts of the country. Notting Hill and Holland Park’s W11 postcode was home to the largest value difference in the country. The cheapest houses cost on average £ 2.138m, while the most expensive were £6.363m – a gap of £4.225m, or 198pc.
The dataset excluded flats, to account for particularly big swings in value driven by the type of properties available, and the shift in demand towards larger family homes in the wake of the pandemic.
David Fell, of Hamptons, said the differences in price were typically driven by the fact that the postcodes encompass two very different areas.
“W11 includes the mega mansions of Holland Park alongside current and cheaper housing towards Westbourne Park,” he said.
But this is also part of the reason why lower-priced properties in these areas have capacity for growth. They share the same amenities that appeal to the buyers of the mega-mansions, and the benefits of a prime location.
In London’s NW1 postcode, which includes Regent’s Park and Primrose Hill, but also Camden Town, the value gap between the top and bottom quartiles of the market for houses was £ 2.675m. This was the second largest percentage gap in the country, at 243pc, with the cheapest homes costing £ 1.1m on average and the most expensive £3.775m.
Roisin O’Neil, of Marsh & Parsons estate agents, said: “A property in Primrose Hill will cost £1,300 per sq ft, while an ex-local authority property in Camden will cost £600 per sq ft.”
Camden is popular with parents buying properties for their children who are students at University College London. “Half of our market is firsttime buyers, and 75pc have financial help from the ‘Bank of Mum and Dad’. One buyer, who was 23, was gifted a £ 1.3m property that they bought in cash,” said Ms O’Neil.
Other London postcodes with big value differences were TW10, which includes Ham Common, Petersham and Richmond Park in the south west of the capital. Here, the value gap was £1.5m, or 205pc.
The top hotspot in the Midlands was Edgbaston’s B15 postcode in Birmingham, where the value gap was £705,000, or 186pc.
The South West was also home to two hotspots, with a £ 513,130 price gap ( 193pc) in Padstow’s PL28 postcode and a £393,750 (170pc) difference in Ottery St Mary’s EX11 postcode.