As property prices in some of the UK’s regions suffer Preston in Lancashire could become one of the biggest beneficiaries
There are upsides and downsides to regional property price drops, those selling are obviously going to be unhappy, but, for those looking to buy a property, the areas with the largest fall in property value could be the perfect honeypot.
Much of the data coming out pertaining to the property market seems to show that some leading property experts were wrong when it came to the catastrophic impact of Brexit to the UK property market as 2016’s overall house price growth was stronger than that seen in 2015. According to data from the ONS annual property inflation was at 7.2 % up from 6.1 % in the year to November 2016. If we look at the pounds and pence on a month-by-month basis, an average UK property value jumped by £3000 in December even though it is historically a slow time of the year for the market.
To buy or not to buy?
Using the latest data for 2016 from the Land Registry, our friends at the online estate agent eMoov looked at the areas of the UK where unlucky homeowners have seen prices fall annually, despite the market as a whole remaining resolute throughout the last year.
Scotland leads the way for price decreases
Let’s start with the City of Aberdeen as this has seen the biggest drop in property values across the whole of the UK in 2016. Given that the overall UK property market has and is predicted to continue increasing in value, it is almost shocking that Aberdeen saw prices down by just under 10% (9.81%). It is not only Aberdeen which has been affected in Scotland as the country accounts for seven of the 16 areas covered. Accompanying Aberdeen in its property price woes is Inverclyde who took second place in the list of areas with the largest drop in property values with a 7.63% fall.
Biggest price falls in England
Joining Cambridge with the unsavoury titles of worst places to buy in England are Eden and Copeland, both of which are adjacent to the Lake District. Whilst the average homeowner in the North West region has enjoyed an increase of 6.58% in property values, Eden and Copeland have seen prices fall by -3.05% and -2.66% respectively. It is surprising that these regions lead the way, as they are known for their beauty and have enjoyed strong growth over the recent years. One can only surmise that these areas are the victims of an overheated market and during the latter part of this buoyant period, buyers looked elsewhere for comparable areas that were not heavily publicised among the best places to live.
The fall and rise of Preston
Manchester and Liverpool are currently the major driving forces to the house price growth in the North-West of England and if the current trend continues will undoubtedly result in these areas becoming unaffordable to many. Both UK and international investors have already spotted this and now the spotlight has started to shine on the Preston area.
In a recent report by the Guardian newspaper Preston was reported to be the best city to live and work in north-west England in the 2016 Good Growth for Cities index of UK’s 42 largest cities, placing it above Manchester and Liverpool.
Preston City Council’s City Deal initiative has and set aside large swathes of the City for residential developments. The first 19 housing zones, of which Preston is one, are to share more than £6m to deliver up to 34,000 homes.
Matt Eastham, Managing Director of Easthams & Co said: “We are being inundated with developers from as far afield as China looking at major Residential and PRS developments. Preston is the best-connected city in the North of England has the 8th largest student population in the UK which is set to grow by a further 15,000 in the next 10 years making it the 4th largest University City in the country. It also has over 40% of the UKs working population within a 1hr commute, house prices are considerably lower than other Northern Cities but are primed for rapid growth over the next few years as the regeneration takes effect. Its 2hrs 15 mins from London, 40 mins from Manchester, 30 mins from the Lake District, 15 mins from the coast and beautiful seaside town of Lytham, the second wealthiest area in the UK after Kensington and Chelsea (millionaires per square mile)”
He adds “I am puzzled by the fact that no one in the property media is reporting the regeneration of Preston and its rise as the next Northern Investment/Buy To Let hotspot.”
Peter Rankin, the Labour leader of Preston council, said the city was a success story due to its location and cheap housing.
“We are just two hours from London and one hour from the Lakes and Manchester, which puts us in a very good position. We are also building 17,000 new homes and all of this contributes to our success,” he said.
Biggest price falls in London
It has been an up and down year for London with the changes to stamp duty tax for buy to let investors and the uncertainty caused by a Brexit vote. Although the capital has remained strong in the face of adversity, homeowners in Hammersmith and Fulham won’t be feeling great about their investment in one of the most expensive markets in the world. It is the only borough to have seen prices decline, down -2.10% in the last year whilst the capital as a whole has seen values rise by over 7%.
The next worst performing boroughs were Richmond upon Thames and Westminster although, at 0.38% and 1.15%, they have at least provided a small return on their investment.
Biggest price falls in Wales
Unfortunately for homeowners in mid-Wales, Ceredigion has seen the largest decline in values across the nation to the west, the fourth largest across the entire UK. Wales as a whole has seen a slump in the property market but has shown signs of recovery towards the back end of 2016. But this wasn’t enough to comfort homeowners in Ceredigion as prices have fallen by -3.49% in the last year.
Merthyr Tydfil has seen the second largest and only other decrease in property values across Wales with a drop of -1.51%.
Founder and CEO of eMoov.co.uk, Russell Quirk, commented: “Despite the market performing well throughout what was a testing year, when the dust settles there will always be areas that have seen a fall in prices on an annual basis.
The UK market is renowned for its strength and reliability in terms of providing some form of return on our investment into bricks and mortar, but there will always be those that have to chalk it down to experience and accept the wooden spoon of UK property.
In this case, it is Aberdeen, Inverclyde and Cambridge amongst others.
Possible reasons behind the price drops
Aberdeen has been rocked by a declining oil industry and a lack of buyer demand so it comes as little surprise that it remains in the doldrums of UK property. I think the SNP’s attempt to weaponise the Brexit vote and seek independence so soon after their original referendum has made a rod for Scottish homeowners’ backs, by creating a great deal more hesitation and uncertainty in the market than was really necessary. Demonstrated by the presence of seven Scottish entries in the 16 areas that have seen prices fall over the last year.
With an average house price close to rivalling that of the capital, Cambridge is no doubt paying the price for an overinflated market during 2016. As prices spiral beyond affordability, a fall in demand by the average Cambridge homeowner will always result in an annual drop in prices.
Although not the largest decrease of the lot, homeowners in Hammersmith and Fulham will no doubt be pinching themselves after drawing the short straw of London property values. Although London has stood tall against the second home stamp duty changes and the buy-to-let sector remains a lucrative business, Hammersmith and Fulham’s high-end market has no doubt suffered most from the turbulence of the last year.”