Residential landlords with properties in the South West could find their investments holding up better than the rest of the country according to one major estate agent.
Knight Frank believes that the area is still expected to outperform the UK average, with only a moderate correction in prices expected through the year (-1 percent compared to -3 percent for the UK as a whole), despite weaker market conditions across the board in early 2008.
South West has nearly a quarter of all of England’s second home stock (24 percent) and achieved house price growth of 11 percent (England and Wales, 9 percent) in the year 2006 – 2007.
Liam Bailey, Head of Residential Research, at Knight Frank said: “Our latest report on market conditions in the Western region, ‘A Different Region: Western residential development review 2008’, reveals the region is well placed to withstand the current economic uncertainties thanks, at least in part, to its sound housing credentials.
“While the global economic downturn witnessed in the second half of 2007 has had an impact on all UK residential markets, dampening capital growth forecasts, the western region’s housing market relies on a diverse set of market drivers. These include lifestyle motivated relocations, ‘downsizers’, a vibrant second home market and an expanding student population, the last of which has contributed to an expanding private rented sector.
“The region is also benefiting from an enlightened series of development programmes that has seen a focus placed on the regeneration of city and town centres and the reuse of abandoned public sector land.
“One particular trend worth noting is the way in which retail and residential projects are being delivered in tandem through large mixed-use developments. Another is the manner in which regeneration is being used as a mechanism to promote the unique selling points of various towns in the region such as Newquay, Padstow, St Ives and Falmouth. We therefore expect the region to fare better than other UK regions, some of which are constrained by narrower purchaser profiles and a greater risk of oversupply.
“In South Wales, Newport’s ambitious redevelopment will dominate future growth plans and the regeneration of Swansea city centre will help the city regain some lost ground on Cardiff. Meanwhile, in Somerset, Dorset, Devon and Cornwall strong demand for new build detached family homes will mean this sub-market will outperform the market average.
“In 2007 the western region experienced house price inflation of 3 percent. The economy of the west remains intrinsically linked to tourism as well as levels of inward investment. In this respect economic growth in the region will be assisted by the next round of EU Structural Funds (2007 – 2013) in which parts of South Wales and Cornwall have been named as key Convergence Regions.”
