Cheltenham
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Cheltenham's Property Market

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I once read that the average homeowner moves every 7 years. We have been in our house for 22 years now so we have gone well past the sell by date. The kids – well grown up kids now – went away to university, graduated, came back for a bit and have now both moved away. The 180’ garden, where they used to play badminton on a warm summer’s afternoon, now looks like the set of I’m a Celebrity Get Me Out of Here. The house is too big and we hate gardening. Well not hate exactly, but we are not great fans, shall we say. But every time I pick up the paper or listen to the news I get nervous about the ‘depressed market’. So what really is happening here and around the country?

According to Nigel Errington-Smith of Errington Smith Estate Agents in Cheltenham, the market all year has been pretty good. It is easing off for Christmas as it always does, but he is anticipating a steady market in the new year, in spite of the ‘doom and gloom’ in the media. In fact people started buying again from March last year and while he doesn’t predict inflation, we should get off to a good start after Christmas especially if the weather is ‘crisp and sunny’.

Philip Pugh of Estate Agents Philip Pugh & Partners told me that while not so many people are looking, those that are ‘mean business.’ Things are not as slow here as the news would have you believe; in fact we are quite busy. He told me that there are always people who have to move, but others are a bit twitchy and prefer to wait if they can. Therefore the market will dip somewhat before Christmas, but the ‘New Year brings new hope and new buyers’. In addition there is quite a lot of mortgage money about though buyers currently need larger deposits. There is also a bit of investment property around but most buyers are looking for real bargains.

Savills Research predicts that over the next five years the division between the best and the rest is set to widen, with prime central London house prices expected to rise by 33% compared to a UK average of 12%. Within the mainstream property market the average will disguise growing divisions. The best stock will outperform the average by 5% over the next five years, while other properties will underperform by the same margin – a difference of 10 percentage points between the different types of property in the same location.

Savills Research has recently published its annual house price forecasts. The company is sticking to its prognosis, first published over a year ago, that average, mainstream UK property prices will experience a “second slip”. But, they say, never have there been bigger differences in the outlook for the best properties versus the rest.

“Unlike the doomsters, we are not forecasting a deep double dip and there will be tiers of the market that may well escape the downturn virtually unscathed,” says Yolande Barnes, head of residential research at Savills.

“It is the detailed forecast that counts. We have not only varied our prognosis for different regions and for prime versus mainstream, but we have also varied them for the most desirable, owner-occupied properties (grade A) versus poorer quality, tenanted stock (grade C), compared to the average (grade B). These distinctions will make a big difference to longer-term performance and we expect markets rich in equity to operate very differently to those historically heavily reliant on mortgage finance.”

As a result, the Savills forecasts for the prime locations and high quality residential property are that values will significantly outperform the UK mainstream housing market over the next five years, both in the pace and scale of growth.

In the shorter term, the mainstream UK market has, on average, outperformed expectations over 2010, by growing in the first six months. However, falling prices have been widely reported in the third and fourth quarters and Savills anticipates that it will end the year down by -0.5%. The forecast falls have therefore been delayed and are now expected in 2011 as declining buyer sentiment impacts on prices, though Savills believes that the falls next year will be contained to an average of a few percentage points across the UK.

“We are currently seeing a lull in prime markets that often occurs in the recovery cycle particularly when activity is dependent on the confidence of equity rich buyers that can itself often be volatile,” says Cook. “Sentiment has been affected by reports of falls in the mainstream and evidence suggests that values will be suppressed for a while.

“But we continue to expect renewed growth to be fuelled both by the continued introduction of overseas equity into prime London, coupled with wealth generated in the financial and business services sector.”

Those benefits are expected to ripple out of London and Savills forecasts that the prime markets will significantly outperform the mainstream both in the speed and scale of recovery.

David Evans, Head of Savills Residential in Cheltenham comments, “We are very fortunate in Cheltenham and the Cotswolds, to be cushioned from some of the negative issues impacting on other areas of the country. This area has historically always been one of the last to feel the impact of a downturn and one of the first to recover.”

He continues, “Here at Savills we have a reputation for selling some of the area’s most aspirational homes. We currently have a high demand for all types of property in and around Cheltenham.

In the last three months the average sale price we have achieved on properties that we are marketing has been 97.2% of the original asking price.”