A year of disturbances for property market – but an exciting 2017 lies ahead for Cambridge
As 2016 ends we look back on the national property market performance over the last 12 months and how future development may impact the local market. It is difficult to summarise what has been an unexpectedly lively year in property, with two events each of which would have constituted the largest market disturbance in many years.
The first of these was new legislation which added an extra three per cent of the purchase price to the stamp duty bills of those buying a second property from April 1, 2016.
While the messaging behind this change was to cool the buy-to-let market, its impact was much broader. Importantly, the increase applied not only to individuals buying second homes, but to all corporate acquisitions of residential properties.
Ironically, in a period of acute housing shortage it had a substantial negative impact, especially at lower prices accessible to smaller builders and developers whose margins were already relatively tight.
The net impact of this change was substantial acceleration of sales prior to April 1 in a bid to avoid the increase, followed by a vacuum in the market of the following few months.
The second major change was, of course, the unexpected vote for Brexit in June which plunged the whole country into uncertainty, including the property market.
The shock was tremendous: all the more so in a traditionally buoyant and liquid market like Cambridge where the wide range of successful international businesses leads to a constant turnover of people moving in and out of the city.
Against a backdrop of complete market uncertainty, many sales fell through. Cambridge residents moving within the city postponed their moves, while incoming purchasers, driven by timetables outside their control, considered their options and often elected to rent short-term.
The immediate aftermath of Brexit fell across traditionally dead summer months, where relatively few properties changed hands in any case. In the heights of uncertainty those having to sell post-Brexit faced a profoundly buyer-biased market, with huge discounts expected and every possibility of buyers pulling out mid-deal.
As the year went on and the sky refused to fall down quite yet, normality started to return with significant demand in the autumn and winter months. While still a buyer’s market, properties started moving and prices remained fairly robust.
Looking at November – the last month for which we have data – demand was significantly up on 2015, and this is reflected in both conventional estate agencies and websites: for example, according to Rightmove, browsing activity was up nine per cent with agreed sales up by 5.2 per cent.
Meanwhile, according to the Land Registry, house prices have risen by just under seven per cent across the year.
This seems to show a resilient housing market following the UK Brexit decision and has caught many analysts by surprise.
Part of this is tight supply: hesitation to purchase a new house also means no old house for sale. Available stock is significantly lower with estate agents: in many cases, buyers will find only one or two properties available matching their needs.
After a languid few months, choice properties are starting to see competitive bidding and closing above asking price.
Looking at the year ahead, Brexit remains the elephant in the room, but lacking a crystal ball we can only suggest that it is a source of uncertainty whose magnitude and duration is difficult to predict.
Demand for properties in the city continues to be driven by the dynamo of the Cambridge Phenomenon, and indeed the devalued pound is a silver lining for many local companies with international sales.
Central city properties continue to enjoy strong demand, but many new developments are attracting new residents as well as investors a bit further afield.
The new Cambridge North train station, expected to open in May 2017, will bring about a much-needed service connecting the Science Park, Business Park and Chesterton area to London.
This is driving strong demand in the north-east of the city, with areas like Old Chesterton combining easy city access with proximity to the Science Park and new station.
In the medium term, the massive North West Cambridge development is bringing a whole new area, complete with housing, schools and amenities, to the land between Huntingdon Road and the M11. Looking further out, Cambridge Airport to the east of the city is due to hold its public examination by the independent planning inspector which could see the delivery of up to 10-12,000 new homes.
All in all a very eventful 2016 and hopefully an exciting and positive 2017. We live in interesting times.