The prime regional housing markets have remained in positive growth both year on year and since the autumn statement of December 2014, in contrast to prime London which has been more significantly impacted by increased stamp duty rates on high value homes, according to new data by international real estate adviser Savills. However, pre referendum uncertainty all but stalled price growth across all regions in the second quarter of 2016.
At a regional level, London’s outer commuting zone, 30-60 minutes from the capital, remained most robust, up 0.8 per cent in the quarter and 3.5 per cent on last year against. By contrast, the prime suburban markets around London slipped into negative territory between April and June, down -0.4 per cent.
Table showing all regional growth
“Prime regional markets are at a different stage in their cycle, having been slower to recover since the 2007 peak, and therefore appear to have been slightly less affected by pre referendum uncertainty,” said Sophie Chick, associate director, Savills research. “However, while the prime regional markets continue to offer real value compared to London, these figures suggest that the ripple of house price growth out from the capital was put on hold before the referendum.”
Across the market, the outperformance of urban locations against their rural counterparts continues to be an overarching trend through all regions. On average year on year, homes in urban locations saw a 3.6 per cent increase in price growth, compared to just 0.9 per cent in rural locations.
Table showing growth by location type
Smaller, lower value homes are also outperforming larger properties. Across the index homes priced under £500,000 experienced the strongest growth, up by 0.9 per cent from April to June and 4.6 per cent annually, while those over £2m saw values fall by -0.2 per cent in the quarter, with prices all but flat (+0.6%) over the past year. Similarly, cottages recorded quarterly price growth of 0.9 per cent and 3.7 per cent annually, compared to country houses which have slipped -0.6 per cent in the past year.
The referendum vote to leave the EU is expected to result in added caution in the prime residential property markets. Looking ahead, the true strength of market demand is only likely to become clear over a period of months, though early indications are that there remains a seam of demand for good quality, well priced stock and much less market disruption than in the capital.