The prime housing markets across the UK all saw positive annual price growth in the year to June 2014, rising by 5.7% on average. While price growth in the East Midlands was slightly more subdued at 4.3%, this is the strongest year-on-year growth since mid 2010.
The market reached a turning point last summer and positive quarterly price growth has been seen every quarter since. Over the longer term, average values still remain -14.8% behind their 2007 peak, in line with the average seen for prime property across the midlands and the north. However, the average masks a divergence in performance as urban locations have seen stronger recovery since peak compared to more rural locations.
City vs Country
Prime properties in cities and towns in the East Midlands have seen annual growth of 4.8%, leaving their values -9.4% below peak.
The city market in Nottingham, in particular, has been boosted by strong demand from investors who are attracted to 1 and 2 bedroom flats which provide a stable income stream and achieve gross yields of 5-6%. In suburban markets such as Mapperley Park, Nottingham and commuter villages including Repton, South Derbyshire, local wealth from owner occupiers has been a key driver of demand.
According to our dealbooks, 75% of buyers in the East Midlands work in local cities and towns. As such, locations that have an easy commute or are close to highly regarded grammar and private schools are very popular.
For those wanting to live more rurally, the cliff villages such as Wellingore and Fulbeck in the south of Lincoln are extremely sought after yet still provide easy access to the amenities of the towns and cities.
Properties in rural locations have seen house price growth of 4.2% over the year but their values still remain -15.8% below peak. Large country houses at the top end of the market have struggled to attract demand since 2007 with values reflecting this.
A house worth £1m at the peak of the market in 2007 would be worth on average £852,000 in today’s market. However, London and aspirational buyers who used to be active are now being tempted to buy after the bottom of the market last summer but the price has to be right. Anything overpriced is remaining on the market.
London & South East of England buyers
London is only around 80 minutes away by train from Newark and Grantham and some 90 minutes from Nottingham. However, the flow of home movers from London and the south east to popular parts of the East Midlands is muted.
At the peak of the market in 2007, 14.6% of buyers came from London and the south east while in 2013/14 only 8.6% of buyers came from these locations.
For those wanting to commute to London the value gap between the two locations is large enough that you can retain a property in the capital.
With the current £ per sq ft in the East Midlands averaging £170 for prime property compared to £1,200 in London, it is evident how far your money will go.
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