The residential property markets across Guildford and Sunningdale have outperformed their local and regional and markets since the economic downturn in 2008. Values are around 5% off their 2007 peak levels across the Metropolitan areas of Surrey and Windsor and Maidenhead, according to the Land Registry.
Since the onset of the housing market downturn transaction levels across England and Wales have suffered largely, as mortgage finance became tighter and deposit levels increased. While these circumstances remain, it is difficult to see transactions increasing.
However, high demand, equity richer markets across London and the South East, including Guildford and Sunningdale have seen higher than average transactions relative to other comparable markets, although still some 30% from peak levels. (See Graph 1)
Another factor influencing the below historic transaction figures has been the reduction of new residential development completions filtering through the system. Guildford, Sunningdale and neighbouring towns have suffered three fold:
- One being associated with the financial economic downturn since 2008, the resulting lack of development finance, poor sentiment and limited financial viability;
- The second being the result of the government designating areas of heathland within the Thames Valley as the Thames Basin Heaths Special protection area (TBH Spa) under the EC Birds Directive.
The TBH Spa includes areas of heathland covering 11 different local authorities. The TBH Spa has been identified as an internationally important habitat for three rare species of bird. As a result, all housing developments within 5km of a Spa were subject to stringent tests and impact assessments.
This reduced the number of dwellings filtering through the planning system and entering the market. As pressure for housing grew within the Thames Basin, the existing guidance has been reconsidered, with the emergence of a tariff system to contribute towards environmental improvements. - Thirdly, low numbers of housing completions, both historically and into the future will continue until the Local Development Framework is progressed (in particular the Strategic Housing Land availability assessment, Green Belt and Countryside Study and Core Strategy) and land is identified for development and allocated (through the Site allocations and Development Control policies Development plan Document).
Low housing completions across Guildford, Sunningdale and other commuter towns have the potential to negatively impact the local area; including contributing to increasing house prices beyond the reach of the majority, restricting economic growth and increasing commuting to work leading to increased traffic congestion.
Current market conditions are allowing higher priced, equity rich sub-sectors of the new build sales market to function routinely, if development funding and planning regulations allow, compared to the retraction of lower priced, more mortgage reliant new build sub-markets, within the same local authorities.
This reduced level of housebuilding has averaged around 190 units per year across Guildford Borough for the past three years, a circa 50% reduction from historic delivery rates. Since 2008 product has proportionally been delivered and targeted towards the more affluent, equity rich purchasers, rather than the mortgage reliant sector of the market across the region.
This has helped to insulate average residential new build values and premiums across Guildford as sales rates across the upper spectrum of the development scale have not been so severely impacted by mortgage rationing.
The same constraints to housebuilding have affected surrounding towns like Sunningdale in the same way, where average pound per square foot values can range from £400 to £600 depending on location and product.
Current estimates suggest that there are over 1,400 homes across Guildford Borough with planning permission, which are yet to be built, while work is progressing on the Town Centre masterplan.
Prospects for the development and sale of new build residential units aimed towards the middle to lower range of the development scale have been enhanced with the introduction of the government's NewBuy Guarantee scheme from March 2012.
The scheme will see the government, developers and lenders share the risk on 95% loan to value mortgages on new build property, with a view to facilitate up to 33,000 new home purchases each year until the end of parliament. This policy opens up assisted purchase of new build houses and flats with a value of up to £500,000 to all qualifying purchasers, not only first time buyers.
Even with anticipated higher supply levels of new build residential units across the whole market spectrum within Guildford and Sunningdale over the next 18 months, we expect that demand, which has increased as a result of deficient supply, will absorb the additional units into the market, with limited impact on pricing or sales rates.
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