Prime regional property offers buyers good value, it is claimed
Prime regional residential property markets in the UK are looking increasingly good value as the polarisation of the national market continues. While the prime London residential markets showed price growth of 4.3% over the last six months, the prime regional markets saw price falls of 2.5%.
Reduced buying activity has resulted in an increase in unsold stock levels, meaning property needs to be well presented and priced competitively to attract interest. This has been particularly the case outside of core London commuter zones, the latest insight report from property consultants Savills shows.
The best property in the best locations continues to sell well if priced according to current market conditions. Overpriced property has only been able to attract interest following a price reduction.
Such cuts have affected one in ten properties each month, with an average cut in asking price of 7.5%.
However, some property types have outperformed others. Townhouses in prime regional markets have held up well, proving attractive to purchasers wanting proximity to the country coupled with the convenience of town living. Values of this type of property are down just, 1.7%, compared to -2.3% for country houses.
Savills says that buyers are increasingly cautious, particularly among those looking to relocate out of London. This has had significant impact on the prime property in the regions, with buyers reluctant to move into weaker markets.
In the first nine months of 2011, the number of buyers relocating from the capital fell by 32%, restricting the flow of money firstly into and then beyond the South East.
As a consequence, the rate of growth in prime London and the prime regional markets continues to diverge. Between March 2009 and September 2011, values in the prime regional markets saw growth of just 3%. By contrast, values in prime London increased by 37% over the same period, having experienced consistent positive annual growth since September 2009.
Those reliant on mortgages have become constrained by increasingly stringent affordability criteria applied by banks, despite low prevailing interest rates. In many cases this has made them less likely to stretch their budgets. Together with a greater level of activity amongst those seeking to downsize, price thresholds have emerged in some markets.
‘We continue to expect prime markets to outperform their mainstream counterparts over the short to medium term. However, with stock increasing, sellers need to price realistically. This should help to realign supply and demand, and help to get some markets moving,’ the report says.
‘The poor economic environment sets the scene for a challenging short to medium term outlook. Nonetheless, prime regional property still appears good value next to that in prime London, given continued price growth in the capita’,’ it concludes.
