City fatcats and the 2nd home squeeze

City fatcats and the 2nd home squeeze

Friday, December 07, 2007

The squeeze on City bonuses is set to hit house prices in the second home hotspots of the South West and East Anglia over the next 12 months...

Savills research is predicting that the squeeze on City bonuses, which has precipitated a slowdown in Prime London residential markets, will affect house prices in the second home hotspots of the South West and East Anglia during the next 12 months.

“Recently, these areas have taken on the characteristics of Prime Central London, namely significant wealth chasing limited stock in unique locations. This has led to a significant growth in values,” says Lucian Cook Director of Savills residential research.

“Over the past ten years the average property value in the top 15 hotspots has increased by 287%, far outstripping the average in England and Wales of 180%.”

*Savills 15 Second Home Hotspots*
Area	County	Distance from London	Average House Price Year to 30/06/07	House Price Growth
Area	County	Distance from London	Average House Price Year to 30/06/07	2001 - 2006	1996 - 2006
Salcombe	Devon	218	505,130	108%	341%
Sandbanks	Dorset	111	483,060	86%	286%
Saint Mawes	Cornwall	272	385,194	91%	233%
Rock	Cornwall	249	378,052	138%	315%
Wythypool	Somerset	191	347,950	111%	214%
Padstow	Cornwall	260	335,520	132%	357%
Cley Next the Sea	Norfolk	122	331,853	113%	273%
Flushing	Cornwall	272	330,242	92%	225%
Walberswick	Suffolk	115	323,769	94%	302%
Burnham Market	Norfolk	121	316,889	72%	315%
Bigbury	Devon	213	314,531	90%	263%
Lyme Regis	Dorset	154	296,540	101%	290%
Port Isaac	Cornwall	242	280,291	79%	297%
Croyde	Devon	209	267,546	103%	301%
Cowes	IOW	93	181,839	87%	299%
Average		189	338,560	100%	287%
England & Wales				69%	182%
Source: Land Registry / Savills

Already starting to slow

There is already evidence that these markets have started to slow as a reaction to reduced City bonus prospects.

However, because these markets showed their most startling growth in the 2001 to 2004 period and have consequently not rocketed ahead to the same degree as Prime London in the past 12 – 18 months, Savills believe the chances of price falls are lower than in the Capital, where they expect prices to drop by 3% during the final quarter of the year.

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