The performance of prime regional property continues to suffer from weak market sentiment amongst buyers as average values across the country fell -0.9% during the three months to the end of September.
It is increasingly clear, as illustrated in Map 1, that commutability to London and the presence of good schools is currently the main influence on prime regional values. Locations lacking this infrastructure and relatively low levels of buyers from London in prime regional markets now present buyers with a less competitive environment in which to buy.
Values of properties in both the suburban and inner commuter belts saw the strongest performance over the past year, although prices did experience small falls of -0.4% and -0.1% respectively.
Lack of London buyers
A lack of wealth migration from London has been an ongoing issue for the regions outside the inner commuter ring. In the wider south of England, there is a mixture of prime property locations and sub markets.
There are the traditional second home hotspots, which are at best currently lukewarm. Properties for sale in these locations would have previously seen the majority of buyers coming from London, looking for a second home. However, the demand is now predominantly local, meaning prices have been re-pegged to the change in the market as buyers have lower levels of discretionary equity.
Additionally, there are the city markets such as Bristol and Bath where the values have held up much better than their neighbouring rural locations due both to stock scarcity and demand for the convenience of town living.
Further afield in the Midlands/North and Scotland, prime house prices have fallen by -2.8% over the past 12 months and transaction levels are suffering. In Scotland, only 48 residential transactions took place at £1 million and above during the first half of 2012, down from 64 in the first half of 2011.
Above £2 million
For property above £2 million there is a wider divergence in performance. The Home Counties, for example, which includes the prime Central London-like pockets of St George’s Hill and Wentworth, showed growth of 0.5% for the quarter. This puts annual growth for the 12 months to the end of September at 4.8% compared to the 5.5% recorded for all prime Central London. However, whereas values for all prime Central London are currently 21.8% above peak, the Home Counties region are at 9.5%.
The Cotswolds as a region is partly bolstered by its proximity to London. However, the country house market here is diverging, those properties within commutable locations and, where relevant, a good school, are selling more quickly and for a higher price than those further away. Across the Cotswolds average values fell by -2.0% for the quarter to the end of September and are now -16% off peak.
Properties over £2 million in areas without ties to London, remain the furthest from their peak values.
In the North of England values suffered the most over the quarter, with falls averaging -3.0% and prices are now a significant -23.9% off peak. Here, Londoners are a thing of the past and there are therefore more opportunities for local buyers to chance lower offers.