Cambridge is a leading centre for technology and business and has taken policy action to ensure that a lack of housing does not hold back the growth of the city. Strong property price growth has accompanied the increase in housebuilding, with values rising by 16.9% over the year to January 2015, according to our indices.

Funding of £100m has been secured through the City Deal, a central government scheme for boosting regional economies outside London. This forms part of an investment package that could total £1bn over the five years to 2020. This will help to part fund jobs, homes and infrastructure, and creates a governance arrangement between the local and county councils, the Local Enterprise Partnership, and the University of Cambridge.

Working together

In Cambridge 1,299 homes were completed in 2013/14, adding over 2.5% to the existing housing stock. This is more than double the average rate in the city over the previous ten years and the second highest rate of any local authority in the country. The England average for the same period was 0.6%. A similar rate of delivery is forecast to continue over the next five years, adding 1,245 homes per year on average.

Just outside the city boundary in South Cambridgeshire, further developments also contribute to Cambridge’s housing supply. Both local authorities have produced local plans to provide for development needs up to 2031. Those plans are being jointly examined, but are unlikely to be adopted before middle of 2016.

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^{Source: 2014 Annual Monitoring Reports}

Values across the city

Prime city centre property is popular with investors, with around 70% bought to let in 2014. Limited supply of housing in central locations has pushed up prices, with values reaching £650 to £700 per sq.ft at the end of 2014 in some new developments.

Schemes such as Riverside, Kaleidoscope and Parkside Place have all sold very strongly. International buyers of new build focus on the prime central area and made up 24% of buyers across the city in 2014 according to Savills dealbook data.

Around the station a new area of prime new build is emerging. A limited number of new schemes are in the pipeline here, including Grand Central by Weston Homes and another phase at CB1 by Hill Residential. Values here can match the central area, with the latest phase of CB1 achieving £550 to £750 per sq.ft.

Urban extensions

At the ‘Southern Fringe’, an urban extension to the south of the city, there is more family housing and investors make up 30% of buyers. Turnover of large properties in the city centre is very low, and prices are high, so moving south is a popular option for those looking for more space and better value. Schemes such as Trumpington Meadows, Paragon, Novo, Seven Acres and Abode have delivered large numbers of new homes. Current prices are £370 to £450 per sq.ft, with a three bedroom house at around £450 to 500k.

The bulk of delivery in the near future is set to come from three main urban extensions: North West Cambridge, including Darwin Green (NIAB) and the NW – Cambridge University site; Cambridge East; and Southern Fringe, including Trumpington Meadows and Great Kneighton. Alone these are scheduled to provide around 5,500 homes in the next five years and over 10,000 in total.

Later in the period fewer sites have been identified within and on the edge of Cambridge, whilst more sites are proposed at new settlements in South Cambridgeshire. This balance between the growth of the City through urban extensions and new settlements in South Cambridgeshire is a major debating point in the local plan process.

^{Source: Savills Research}

New land needed to support future growth

On the edge of the city, the sites currently being developed were released from the Green Belt through the last round of local plans. Outside the Green Belt, large new settlements will also contribute new homes to the Cambridge market. Meeting Cambridge and South Cambridgeshire’s housing need – estimated at up to 46,000 homes over the 20 years to 2031 – will require a lot more land coming forward from a range of sources.

At Northstowe, in South Cambridgeshire District, five miles to the north west of Cambridge city centre, a 10,000 home new town is planned on the former Oakington Barracks and surrounding farmland. The Homes and Communities Agency (HCA) is leading the project, in partnership with developers Gallagher Estates. The first new homes are scheduled for completion in 2016.

The new homes are likely to be more affordable than Cambridge property and will be built to strict low-carbon standards. Corresponding infrastructure upgrades include primary and secondary schools and improvements to the A14. A guided busway linking Huntingdon and St. Ives to Trumpington opened in 2011 and runs adjacent to the site; additional stops will be added as part of the development.

Elsewhere in Cambridgeshire, an extension to the new settlement at Cambourne, and large new developments at Bourn Airfield, Alconbury, Wyton and Waterbeach, are proposed. It will be important to get the pricing and infrastructure right in order to attract buyers looking for a more affordable alternative to Cambridge. Critical to the debate on the overall development strategy is the ability to deliver sustainable transport links between these sites and the city.

There is also scope for these sites to contribute to the need for affordably priced housing within London’s commuter zone. A station at Waterbeach and the proposed one at Alconbury will both offer travel times to central London of just over one hour.