The Norwich residential property market has shown signs of recovering to its former peak, following the economic downturn, which derailed the market.
Average house prices across Norwich have now recovered by 11% from their trough in 2009, and today are now within 10% of previous 2007 peak levels, outperforming the East region and the UK national average, which are both 11% from their former peak values. (See Graph 6)
During the first three-quarters of 2011, prices have softened across most residential markets and transaction levels have remained flat. Residential transactions across the whole Norfolk market are currently 45% lower than those levels seen at the 2006/07 peak, although the market is returning closer to a more normal trading environment compared to national and regional levels, which are 50% and 53% from their respective peaks.
Going forward, we expect a slow and steady return to higher levels of lending at higher loan-to-value ratios, which would likely allow pent-up demand to be released progressively into the market during a period of high mortgage affordability.
Housebuilding in the city has continued to decline since the full extent of the recession and a notable slowdown in housing delivery became apparent (Graph 1). The major allocated residential sites across Norwich are still being built out, but at a slower rate than pre-2008 levels, which has supported housing delivery throughout 2009/10. This is in-line with the national trend which has seen housebuilding reduce to the lowest levels since 1923.
Residential development across Norwich is forecast to remain low before increasing back to historic development levels in 2013/14.
With changing market conditions, the average density of developments has also reduced, with a move away from high-density, flatted schemes.
This lack of delivery to the market over the past two years has helped insulate new build residential values and rates of sale across Norwich. Reduced development activity has meant the avoidance of an available overhang of stock, as seen in other East Anglian towns such as Ipswich.
Aside from Three Score and Bowthorpe, there are no large undeveloped housing allocations within the city boundary according to the latest Annual Monitoring Report.
Consequently, the contribution of the city of Norwich to overall housing delivery in the Greater Norwich area is heavily reliant on identifying additional ‘urban capacity’. However, there remains a strong pipeline of 2,990 residential units across Norwich, on sites over 10 dwellings, with active planning permission.
Future housing delivery will come through large strategic sites surrounding the city, and will look to gain planning permission before the implementation of the Community Infrastructure Levy (CIL).
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