The East of England, which takes in areas from Hertfordshire to Norfolk, has recorded the biggest hike in property prices over the past 12 months, up 10.5% to £279,000 on average, the latest figures from the ONS reveal.
The most recent report from Rightmove, based on asking prices of properties for sale, also show a steady start to 2017’s housing market, with annual growth in the east of the country significantly outpacing London and the South West, fuelled largely by a widening supply-demand imbalance in the market, as more people in southern England seek ‘value for money homes’ further afield.
This month, we head east to have a glance at the local markets in Luton, Cambridge and Norfolk.
House price growth may have eased across many parts of the UK since the first quarter of 2016, but not in Luton.
A large Bedfordshire town best known for its airport, Vauxhall vans, and the University of Bedfordshire, Luton was the UK’s property hotspot last year, according to the UK’s largest mortgage lender.
Luton saw house prices rise 19.4% in 2016, the Halifax said, which is significantly higher than the 6.5% annual inflation recorded across the UK in the year to the end of December.
The average residential property in Luton increased in price by £41,702 during 2016, from £214,934 to £256,636 in 2016.
The Halifax said the main reason was that the town is within easy commuting distance of London, but still has relatively low property prices.
Housing economist at Halifax, Martin Ellis (left), commented: “Most of the areas that saw the biggest house price rises during 2016 are either within close commuting distance of the capital or in outer London.
“Demand in these areas has risen as substantial property price rises in central London over the last few years have caused increasing numbers of people to seek property in more affordable areas.”
But while many local homeowners will welcome the fact that Luton has recorded the biggest percentage rise in house prices among major UK towns and cities over the past year, this could cause problems for people hoping to get on the housing ladder, according to Luton Borough Councillor Tom Shaw.
He fears that that the sharp increase in residential property prices will make it harder for first-time buyers to get on the ladder.
He said: “It’s a good thing for the town, but it does mean that a council house is now worth around £250,000, meaning it's near impossible for some to get a mortgage, which is a challenge we as a council will have to deal with.
“It also means it's even harder for the council to deal with our housing shortages, as the cost of land is just increasing.
“For people who have a mortgage and equity on their home it's a good thing, but for those without it just makes it harder to get on the property ladder.”
Councillor Shaw said that the council will be looking at ways to alleviate the problem, which may include the introduction of a shared ownership programme.
But with plans to regenerate Luton, including a range of schemes set to launch over the next 18 months, the signs are that the town will continue to offer plenty of room for growth.
A proposal to transform part of the 24.5 hectare former Vauxhall car plant site in Luton into a £300m plus mixed-use development, for instance, was approved by Luton Borough Council in January.
Plans for the scheme, put forward by developer J2 Global, will include 685 residential apartments, a hotel complex including banqueting facilities, medical centre, public realm retail and leisure piazza, an iconic 65 metre 22-storey tower, which will make it Luton’s tallest building, as well as a public park and landscaping throughout.
Javed Hussain, managing director of J2 Global Corporation Limited, commented: “After years of planning we couldn't be happier to get the go-ahead to deliver this iconic project.
Located on the former Vauxhall site on the edge of the town centre, just across the road from Luton Airport Parkway station, it couldn't be better placed for those that will live, work and visit here.
“Napier Gateway will help transform the town into an out-of-London hotspot, with a mixture of private sale and affordable homes, as well as modern buildings and facilities to attract new businesses, which in turn will bring hundreds of new jobs to the area.”
Set to complete in 2020, Napier Gateway is one of a number projects planned for Luton and its immediate surroundings; London Luton Airport is currently undergoing a £110m transformation, with a 395 acre enterprise zone being delivered close by.
Other projects include a new £150m 22,500-seater football and concert stadium, as well as an expansion of the Luton Cultural Quarter and improved public transport interchange facilities in Luton town centre.
Luton Council last year launched its Investment Framework, a 20-year plan for major transformation through inward investment which outlines how Luton will achieve strong, sustainable and balanced growth and create more than 18,500 jobs for local people.
The framework underpins how the council is working with key partners to drive improvements to health and wellbeing and enhance prosperity across the town.
Councillor Hazel Simmons, leader of Luton Council, said: “We are absolutely clear in our vision for Luton and the Investment Framework sets out how we will grow the economy and transform the town in order to improve the quality of life for our residents.
“In less than a year since it was drafted we’ve completed the £31m J10a improvement scheme and secured Enterprise Zone status, while the £110m London Luton Airport redevelopment is well underway, along with other major developments moving forward.
“This, combined with the fact that there are already over 1,000 construction workers on site in four schemes as we speak, demonstrates that the transformation of Luton is well and truly happening.”
With eight major strategic development sites offering retail, leisure, hotels and housing opportunities and large sites for engineering, technology, creative and aviation-linked employment, it is clear that Luton is becoming a location of choice for some of the fastest growing industries that are driving the UK economy, according to Tony Danaher, chief executive, Regeneration Investment Organisation of UK Trade & Investment.
He commented: “Situated only 30 miles north of London, Luton has easy access to the major cities in the UK due to its excellent road, rail and air links. It has three dedicated railway stations, with London only 22 minutes by train, making it one of the most affordable commuter towns in the country.
“However Luton’s appeal is much more than its location and affordability, it is the top town in the UK for super-fast broadband connectivity and with a number of major development schemes coming forward, including a 395 acre Enterprise Zone, it starts to become obvious why Luton is fast becoming a destination of choice for many businesses.”
While Luton’s property market has performed exceptionally well over the last 12 months, Cambridge has been a consistent top performer over the past decade.
When it comes to the league table of popular locations beyond London – many within an hour’s commute of the capital – this university city ranks highly.
Thanks to its splendid city centre, high performing schools and growing international reputation as a tech hub, Cambridge is rapidly closing the price gap with more expensive Oxford, with average asking prices in the area having soared by 75% in 10 years to an average of £463,093, according to Rightmove.
The property portal’s findings are supported by separate data from the Land Registry which show that property price inflation over the past two decades has been greatest in areas where houses were already most expensive, with homeowners in Cambridge making the equivalent of almost £15,000 a year since 1995 - after inflation - simply by owning a property.
Martin Walshe, director of Cheffins, told the press: “Against a backdrop of uncertainty for the housing market throughout the UK, Cambridge has continued to stand firm with an incredibly strong market and high prices being paid for the best property.
“We have seen a good return of active buyers since the end of the summer and through the Autumn and this has resulted in strong sales and even competitive bidding and sealed bids for the best houses.
“And this has gone to show that there has been no slowdown in the Cambridge market whatsoever as a huge number of buyers chase a limit of supply.”
Walshe believes that prices in Cambridge will continue to grow over the next five years, albeit at a slower rate due to uncertainty in the political landscape, although this will largely depend on the details of the final Brexit deal.
Cambridge has long appealed to international buyers, including investors, as well as buyers moving from London, and this trend looks set to continue, as Cambridge’s biggest employers, including ARM, AstraZeneca and the University, grow, while other companies follow in their footsteps by moving into Cambridge, bringing with them investment into the economy, jobs and a need for housing to buy as well as rent.
“Our market in Cambridge continues to be one of the busiest throughout the UK and this is set to increase as more and more corporate giants make the city one of their strategic locations,” said Sarah Bush (right), director at Cheffins.
“With approximately 40% of our tenants being those who have relocated to the area with work, we are set to see an influx of this over the next few years,” she added.
“There were a number of deals throughout East Anglia in 2016, with ARM, Illumina and Gilead all signing on acres of R and D units all around Cambridge thus bringing with them thousands of new employees.”
Bush reports that last year was a particularly good year for the tech industry, many of whom want to be within the research heartland which is Cambridge’s Silicon Fen and have given significant investment to the existing science parks.
Illumina last year announced it was pressing ahead with a new European headquarters in Cambridge, which involves an additional 250,000 sq ft under development on Granta Park, whilst Gilead signed on a new building at Granta Park of over 93,000 sq ft.
ARM, which hit headlines in July due to its acquisition by SoftBank, has announced that it is developing two areas of land adjoining its current headquarters at Peterhouse Technology Park and has promised to double its staff count.
Separate announcements have also come from Amazon, Spotify and Google, all of which have opened, or are planning on opening large offices in Cambridge and Papworth Hospital has announced that it will move to Addenbrookes in 2018, all increasing footfall and demand for Cambridge property.
Bush continued: “Whilst these employees from the tech and science sectors will take up much of our market this year, there is still significant demand from University-assisted movers as well as the local market.
“We have been inundated in enquiries for all property types since the start of last year, with demand high for everything from one-bedroom flats to large family homes.
“We have handled some of the most highly sought-after homes, with the majority of properties seeing competitive bidding and being let in a matter of days, or even hours in some cases.”
Cambridge has reportedly seen one of the highest rent increases in the whole of the UK, with prices growing by up to 20% in the past 12 months.
Bush concluded: “Typical values now see around £3,000 per month for a family home in the city, and up to £1,600 for a two or three-bedroom terraced property. One bedroom flats can be rented for approximately £1,000 per month, however we expect that these prices will continue to grow as the disparity between supply and demand increases.”
Growing demand from people looking to live in Norfolk, coupled with a general housing shortage on the market, has pushed house prices in the region up by more than 10% over the past 12 months to an average asking price of almost £230,000, according to Rightmove.
Norfolk has enjoyed economic growth, supported by various projects, including the Norwich Northern Distributor Road (NDR), which will stretch from the A47 at Postwick to the A1067 Fakenham Road, over the Norwich to Sheringham railway line.
Supporters of the NDR, which contractors hope could be ready to take traffic by the end of this year, say the road will reduce congestion in the city, provide an economic boost for the region, and potentially boost demand for property, which could drive up property prices, especially as there is a general lack of housing supply.
In an effort to boost the delivery of much needed new build homes, the New Anglia Local Enterprise Partnership (LEP) has pledged to build 117,000 new homes in Norfolk and Suffolk over the next 10 years as part of a wider strategy for the area.
In Norfolk, the biggest increase in property prices last year was recorded in south Norfolk, where an average home now costs £245,771 – up 10.2% or £22,724, on the £223,047 figure at the end of 2015.
Alex Parish, associate director at Whittley Parish estate agents in south Norfolk, told the press that the district’s proximity to Norwich was part of its appeal.
“We are seeing the same popularity with Kent and Essex, which have good transport links into London,” he said. “Prices in areas around Cambridge are rising, and it seems the same is happening around Norwich.”
Breckland, Norwich, west Norfolk and Broadland all saw house price growth outstrip the national average last year, with increases of 10%, 9.2%, 8.2% and 7.6% respectively.
Annual house price growth in the region’s coastal districts was significantly slower, with home prices in Great Yarmouth rising by 4.3%, 4.1% in Waveney and 5.4% in North Norfolk.
Jeff Cox, director of Henleys estate agents in the north Norfolk coastal town of Cromer, said that demand in the district is currently lower than it was this time last year, but there are signs that market conditions are improving with many “good quality buyers” emerging in recent weeks.
According to Cox (right), demand for property is being fuelled primarily by retirees and people looking for a second home, which is placing upward pressure on property prices in the local area, led by gains in Cromer and Sheringham.
He said: “North Norfolk is always featured in the news as a nice place to live and demand has become very high.
“People living down south can sell their property and buy another in Norfolk for much less, because the area still offers very good value for money.”
*Marc Da Silva is Estate Agent Today and Letting Agent Today Features Editor. You can follow him on Twitter @propertyjourno