The Oxford housing market has been one of the leaders in the recovery, with house prices now marginally higher (1%) than at the peak of the market in 2007.
Oxford attracts a diverse group of residents, with strong local employment, combined with student and commuter demand. This assorted demand profile has underpinned house price growth in the city and maintained strong rates of sale for new build developments (see Graph 1).
Unlike other cities, Oxford did not see the dearth of new build flatted development so prevalent in many city markets over the past decade. This has meant that while these areas have had to contend with falling levels of demand and high levels of unoccupied stock, Oxford has emerged relatively unscathed.
This has reassured purchasers of the relative security of the
Oxford property market and encouraged investors and owner-occupiers (see Graph 2).
Transaction levels
With access to mortgage finance remaining constrained, particularly at higher loan to values, transaction levels across England and Wales remain 45% lower than at the peak of the market.
Oxford has also experienced falls in transactions, however, strong demand and higher levels of equity and affluence within the local market has meant that Oxford has fared better than the national average, with levels of transactions now 30% lower than those seen at the 2006/07 peak.
The turbulent financial market and the inability or unwillingness to take on debt has also affected the development sector, in particular the ability to secure competitively priced development finance, with housing completions, at a national level falling by 50%.
This has resulted in new build stock becoming increasingly scarce. In Oxford only 275 new homes were completed in 2009/10 compared with over 900 per annum in 2005/06 (see Graph 3).
Development activity is now increasing, and we expect that more risk averse post downturn developers and their lenders will continue to concentrate on more established markets such as Oxford, when deciding on which opportunities to progress.
Type of buyers
The Oxford new homes market continues to be dominated by
owner-occupiers, demanding good quality stock. Investor buyers,
who were more prevalent pre-downturn, have now started
to return to the market. So far this year, investor purchasers have accounted for 14% of Savills sales, compared with only 3% during 2008/2009 (see Graph 4).
Investor purchasers are buying flats and houses, with gross yields of around 5%, as well as prospects for significant house price growth over the short-to-medium-term, making Oxford an attractive proposition.
Within both the city and surrounding towns and villages, families continue to purchase new build homes, many who are looking for commutability, (either into Oxford, the M4 corridor or London), as well as access to top performing state and private schools.
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