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February 24, 2017

Nearly a decade since the global financial crisis, how is the Exeter property market coping?

Filed under: Latest News — Instinctif Partners @ 3:21 pm

Richard Addington, Director at Jackson-Stops & Staff’s Exeter branch, comments on this month’s House Price Index figures (Office for National Statistics) and how they relate to the long term trends in the property market.

While it has been nearly a decade since the global financial crisis and subsequent fall in most markets (including the property market in the West Country) these events still hold relevance in the market today. The events of that time can now, with the benefit of hindsight, be seen to be the beginnings of a fundamental change in attitudes towards property. This month’s review of house prices by the ONS and Land Registry helps to confirm some interesting trends and long term changes to the housing market.

The ONS headline figure proclaims that national average prices rose 7.2% in the year up to December 2016. This figure masks massive differences around the country as well the differing price bands. While the ONS data does not break down by price band or geographically more locally than the figures for local authority areas, it becomes obvious when looking across the country (outside of London and the South East) that the areas that have increased in price fastest are the urban areas such as Bristol, Southampton, Oxford and Cambridge, which are up to 40% ahead over the last decade. In the West Country, average prices in Exeter are up 20% but in local authority areas that don’t have large urban centres of population, such as Torridge, West Devon and Mid Devon, average prices are still at (or slightly less than) where they were a decade ago. In Devon, house prices are now only about 8% ahead of their peak in October 2007 although they rose on average 6% last year.

What does this tell us about the long term trends in the market? At Jackson Stops & Staff, we have noticed anecdotal evidence of the trend that is borne out by these figures. That is a trend facing away from the countryside to instead look at, urban or close to urban, village living.  What is not shown by the figures is a move towards more modern styling and away from older (and more expensive to maintain) properties. It is worth noting that I can currently think of three vendors who are either moving or planning to move from a larger and older country house to plots on which they will build their own homes.

These two influences on the market tie in with the demographic movement of the average age of home owners and their changing requirements. The overwhelming equity in national housing stock is owned by the over-60s, so it is the requirement of this age group, which is driving the fastest growth in the market. They are fuelling the demand for urban property, where amenities are more on hand, and for easily managed property which is more likely to be new or modern. This demographic movement is also affecting the price bands that are seeing the strongest demand. Those trading down have the strongest buying power so it is the market just below “the top” where there is most demand and competition. This effect is indeed so strong that the gap between “the top” and the next rung down is closing and has already started to disappear altogether in some instances.