The winners and the losers in the Suffolk property market game
Over the past year house prices have been rising steadily across Suffolk and Essex, but hidden in those statistics, some buyers have fared much better than others.
Mark Sargeantson, a consultant from Fenn Wright, says the market has been much more subdued this year.
“Property prices above £200,000 have really fallen, by 5% to 20%, over the last few months,” he says.
“House price increases have very much depended on where you live - Suffolk house prices have increased much more than in Essex, and Ipswich has performed better than Colchester.”
Land registry figures show that prices overall in Essex have increased by 1.9% and in Colchester by 0.1%, compared to a more buoyant 4% rise in Ipswich and 4.7% overall in Suffolk.
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“Total residential for sale stock available in the Ipswich area in the last three months is up by 13.5%, but sales are down by 9.8%, so its now becoming a buyer’s market,” Mr Sargeantson adds. “But the slight rise in the bank base rate from 0.5% to 0.75% has caused some concern among house buyers.”
First time buyers are reaping rewards
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For first time buyers, the market has held up well, explains Mr Sargeantson.
Last year, stamp duty was abolished on properties worth up to £300,000, which has enabled thousands of people in our region to get a foothold on the property ladder. The Help to Buy scheme, which has just been extended to 2023, is also a “major factor.”
“The level of activity is continuing strongly,” says Mr Sargeantson. “Its substantially supported by the help to buy scheme - if that didn’t exist, we are certain we would not be seeing the level of new home sales. Its given a tremendous boost to that market.
“But we hear people argue that it has helped house builders more than house buyers, and is still continuing to do so.
“We are seeing the huge impact of stamp duty and tax - that has cooled down the market and therefore improved the landscape for first time buyers.”
Are landlords the losers?
If first time buyers are the current winners in the property game, then buy to let landlords could be said to be the losers.
Buy to let mortgage approvals are down 50% compared with three years ago, which Mr Sargeantson puts down to the “punitive tax regime and 3% stamp duty.” “We are seeing that buy to let investors are buying less property now,” says Mr Sargeantson.
Stuart Raven, a partner with Birketts Solicitors, believes that legislative changes being heralded in next year that ban letting agent fees, and also limit the amount that the landlord can take as a rental deposit to a maximum of six weeks rent- will further dampen landlords’ spirits.
“It is also likely that the minimum term guaranteed under Assured Shorthold Tenancy contracts will be changed to three years,” he said. “The general consensus is that these short term tenancies have been a real catalyst for the buy to let sector, because they have made it relatively easy to recover possession.”
Mr Raven also questions how mortgage companies will feel about the proposed longer term tenancies.
“This might have a knock on effect, meaning that they will be less likely to lend on buy to let investment,” he says. “The unintended consequence is that it could have a big effect on the buy to let sector.”
Big Suffolk infrastructure changes ahead
For many years there have been plans in the offing to build an Upper Orwell Crossing Bridge, and the project was promoted by the former Ipswich MP Ben Gummer. But Suffolk County Council has put the project on hold because it needs an additional to £43m to fund it.
“The project had seemed to be gaining momentum,” says Mr Sargeantson. “Now, it seems that the estimated costs have increased enormously, and there is less enthusiasm for it.
“There is now much more interest in the Ipswich Northern Bypass, which has been being talked about for the last 30 years.
“Ipswich Northern Bypass now looks like a more attractive option to ease traffic congestion, with all the house building that’s happening.”
A Northern relief road would manage the complexities of keeping traffic moving through East Suffolk, and the business case for such a project is currently ongoing.
Mr Sargeantson claims that the Community Infrastructure levy generated from the building of the Ipswich Garden Suburb of 3,500 homes would generate a potential sum of money which would go some way towards it.
Shortage of good office stock
Mr Sargeantson claims that office rents in Ipswich are rising for good quality stock, “of which there is a shortage,” he says. “Development of new and refurbished buildings in Princes Street in Ipswich is significantly improving the station gateway approach,” he adds.
The commercial market is strong for warehouse and industrial units in Suffolk, with a shortage of stock resulting in rising rents and capital values.