Assetz® News - West country 'beating the trend'

West country 'beating the trend'

13th August 2008 |

The south-west has for some time now been seen as a strong region for property investment. While the latest Land Registry housing figures showed the average house price to be only a little above the average for England and Wales (£189,700 compared to £180,781), there are many places within this diverse part of the country that are much more costly.

Such is the case with many coastal areas. Sandbanks in Dorset is a prime example of a location full of millionaires' pads, but the second home market and holiday rental scene is a major industry, particularly in Cornwall. Indeed, one of the concerns about housing has been the question of how affordable homes can be provided for locals, given the popularity of property in such areas.

According to the Times, none of this has changed since the credit crunch began. While flats in northern cities may be struggling, estate agents have told the paper that investment is still carrying on apace in the west. Richard Copus, an agent from the Devon town of Newton Abbott, stated: "Viewings have increased and offers are being made. I think people are bored of hearing about the credit crunch and want to get on with their lives."

Similarly, neighbouring Cornwall is still reported to be booming, with Miles Kevin of Knight Frank's Exeter office stating: "The best properties still sell. Six weeks ago we sold 15 flats off-plan in one day in a new development, Tregurrian in Watergate Bay. The two-beds went for £750,000 - that's Kensington prices." Meanwhile in Truro, Ian Lillicrap of Lillicrap Chilton said: "July 2007 was a record month for us, but this July was even better."

Mr Lillicrap explained that a couple of factors have kept the county booming. One is the popularity of domestic holidays in these financially-stretched times, with more expensive flights and unfavourable exchange rates making Spain a place many are avoiding even as a holiday destination, let alone a place to buy property. In addition, he noted, the shortage of supply keeps prices up.

Investors hoping to make the most of the south-west's strength may wonder how long this may last. In terms of the supply, a clue may arise from an exercise taking place in a popular coastal holiday area, the English Riviera of Torbay. The government's Regional Spatial Strategy has determined that between 2006 and 2026 the south-west region must build an extra 592,460 new homes, with Torbay's share being half as much again as the council had planned for.

Commenting as he announced the consultation exercise, which involves writing to 600 residents, the council's cabinet member responsible for planning Chris Lewis said: "The council has supported a growth rate of 10,000 dwellings. However, the government is suggesting 15,000 new homes which would mean that more development on greenfield sites would be required."

When the replies are in by the deadline in mid-October, Torbay will know how strong any objections may be and how difficult it could be to get the extra homes built, given the sensitivity of Greenfield construction. Other locations in Devon, Cornwall and elsewhere may also face the same issue. Potentially, protracted objections may stymie extra building, meaning that the scarcity value of properties will remain. For investors hoping to see the value of their west country bricks and mortar rise, this may help sustain such values.