Residential developments across Norwich may also benefit from the newly announced (November 2011), £400 million 'Get Britain Building' fund, which aims to bring forward stalled sites that are shovel ready with planning permission. A prospectus and invitation for bids are expected before the end of the year (2011), with the stated intention of unlocking development of up to 16,000 homes.
This recent funding initiative was announced alongside a newly proposed Mortgage Indemnity Guarantee Scheme for buyers of new homes, which could also improve rates of sales as first-time buyers would be able to continue to access the market when funding for the FirstBuy equity loan scheme runs out.
Type of buyers
During the previous two years, there had been a change in purchaser type of new build property, from buy-to-let investment purchasers (which were a symbol of the boom, high loan-to-value mortgage years), towards equity-rich owner-occupiers. (Graph 2)
Recent evidence suggests that during 2011 investor demand has returned to Norwich’s residential market, a result of the schemes which are currently marketing, historically low interest rates, and also investors looking to take advantage of strong rental demand, as first-time buyers are priced out of the market.
According to the Findaproperty.com rental index, values in the East of England have risen by 5% annually to the end of September 2011, compared to 4.6% nationally.
Sources of demand
Employment levels across Norwich fell as a result of the recent downturn and suffered three years of negative employment growth (Graph 4). This trend has now reversed, with Oxford Economics forecasting growth from 2012 of 1.2% per year over the next five-year period. Employment growth is forecast to increase above the regional and national figure for the equivalent five-year period.
The employment market has strong links to the University of East Anglia, which has seen student numbers increase by 40% over the past decade and by 20% in the past five years, further increasing housing demand. During the same period the number of international students has also increased by 70% and 50% respectively (Graph 3).
This rise in student numbers is concurrent to the increasing link between the University and employment within Norwich.
The importance of Aviva to the city is one aspect, but the Norwich Research Park – set in over 160 hectares of parkland on the outskirts of East Anglia’s historic market city, employing over 11,000 people, and with an additional 50 hectares earmarked by South Norfolk Council for further development – is another major positive for the housing market.
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