Prime property prices in key UK locations where train services make them commuter zones for London have seen prices rise in the second quarter of 2016, according to the latest index data.
In Bristol, where commuters are within reach of London’s Paddington station, prime property prices have increased by 7.4% in the year to June 2016 with the second quarter of the year seeing a 17% rise in new buyer registration and a 19% rise in viewings.
In nearby Cheltenham prime property prices increased by 8.6% year on year and 2% quarter on quarter, according to the index data from real estate firm Knight Frank, and this compared with annual growth of 1.3% in the UK wide prime property market.
But in Oxford, another popular commuter city, prime prices increases by just 0.3% between April and June, taking annual price growth to 0.7% but the data report says that demand remains strong.
In Oxford the slow down in price growth is attributed to uncertainty in the run up to June’s historic referendum and the decision to leave the European Union.
“After several years of strong price increases, during which the city has comfortably outperformed the wider UK, the latest figures suggest that price growth at the top end of the market in Oxford has started to ease,” said Oliver Knight, research associate at Knight Frank.
“While the fundamentals underpinning the market remain unchanged, the reasons for the easing are twofold. Firstly, there was a softening in demand for prime property in the immediate run up to the EU referendum, with potential purchasers adopting a wait and see approach,” he explained.
“Secondly, and arguably more importantly, recent changes to stamp duty levied on the purchase price of the most valuable properties has made buyers increasingly price sensitive,” he added.
He pointed out that prime homes in Oxford worth more than £2m rose in value by just 0.1% in the year to June as buyers and vendors factored higher purchase costs into pricing and offers. In comparison, properties worth up to £750,000, where the stamp duty burden is lower, rose by 1.7%.
According to William Kirkland, Knight Frank Partner in the firm’s Oxford City Department, demand remains consistent and new high speed rail link at Oxford Parkway, which opened in October 2015, has helped stimulate demand in property markets to the north of the city as commuters using the line can now be in London Marylebone in under an hour.
“As a result, there has been an increase in the number of Londoners looking to buy property in Oxford so far this year. Some 25% of all prospective buyers registering with Knight Frank’s Oxford office in 2016 were based in the capital, up from 19% in 2015,” he added.
A growing imbalance between supply and demand continues to drive strong price growth in the prime Cheltenham market. There were 19% fewer prime properties available for sale across Cheltenham at the end of June year on year and as a result, competition among buyers has been strong for the best homes. Demand has also been underpinned by a sustained period of very low interest rates, with buyers, especially those with access to high levels of equity, able to take advantage of very competitive fixed term mortgage deals.
Nick Chivers, of Knight Frank Cheltenham, pointed out that the town offers some of the UK’s best schools, excellent amenities, transport links and beautiful surrounding countryside. “These assets, combined with the on-going imbalance between supply and demand, will continue to underpin sales in the area,” he said.
Some parts of Bristol have seen the highest growth. For example, Redland, Stoke Bishop and Clifton have seen price growth above the wider city average at 12.3%, 8.6% and 8.5% respectively.
‘Bristol’s continued strong price growth highlights an ongoing trend of demand among buyers for properties in towns and cities that are home to excellent transport links, schools and amenities,’ said Knight.
While James Toogood, partner at the Bristol office, said that geographical location and the diversity of the city allows Bristol to appeal to all types of buyers and with the underlying shortage of stock and an increase in registered buyers.
“The fundamentals of the market in Bristol show little sign of changing with low mortgage rates and a growing imbalance between supply and demand. The primary drivers of the market are also largely unaffected with access to schools and improving transport links remaining a key attraction for buyers,” he pointed out.
He added that a reduction in journey times between Bristol and London as a result of improvements being made to the rail line is likely to further augment the city’s appeal both locally and among buyers from outside the region who still need to travel into the capital on a relatively regular basis