Rising property prices in the south-east are likely to drive first-time buyers out of the area, according to research from Cluttons. Over the next five years it is expected people will look elsewhere for cheap property, giving regional markets a boost. Indeed, more than two thirds of people (72 per cent) believe house prices in London and the south-east will rise more than earnings over the next decade.
However, there are concerns that this move away from the south-east will dampen London's economic growth and create a 'brain drain'. Cluttons claims businesses could be faced with workforce losses, as staff leave for pastures new. Consequently, some firms may turn to alternative global locations to base their business.
Sue Foxley, head of Cluttons research, explained: "With significant house price inflation in the south-east above rises in real incomes, many aspiring homeowners are effectively being priced out of the region as they search for more affordable homes. Anxiety over future price rises is one of the primary emotional drivers for those seeking to get onto the first rung of the housing ladder, who are subsequently looking elsewhere for their first property. Inevitably this will have a positive ripple effect on the rest of the UK – as people move further out, thereby creating more demand in surrounding cities."
Cluttons presented its findings at a seminar hosted at the Soho Hotel, which was attended by leading industry figures and housing sector analysts. Among them was Greg B Davies, head of behavioural and quantitative investment philosophy at Barclays Wealth and Investment Management, and Malcolm Allan, managing director of Placematters.
The study also found that over a third of people renting in Britain feel they need to buy before prices rise any further. Yet the average tenant thinks it will take them 8.5 years to be in a position to buy a home. Of those surveyed, 72 per cent felt that homeownership would provide them greater housing security, while 80 per cent want to buy a property as they consider it to be a good investment for the future.
- Monday 21 October 2013