Second home ownership driving up prices in UK
Second home ownership drives up prices in the UK in areas with a high concentration of these types of property and the effect is not just limited to the popular south coast towns, research reveals.
The impact can be dramatic and with demand for second homes increasing the divide between local and second markets looks set to continue widening, according to a report from Knight Frank.
‘Wealthy incomers have long been a source for complaint from locals in second home hot spots. The level of this uplift can be dramatic,’ said Liam Bailey, head of residential research at Knight Frank. He gave an example of Constantine Bay in Cornwall where average prices are 131% higher than the local average.
In three other locations, Rock and Trebetherick, both in Cornwall, and Bamburgh in Northumberland, all have second home price uplifts of between 90% and 100%, the research shows.
The top English second home hot spots in 2009 were in the South Hams local authority area which includes Dittisham, Kingswear and Salcombe. Nearly one in ten homes in the South Hams district are registered as second homes.
In North Cornwall, Berwick-upon-Tweed and North Norfolk similar second home ratios of around 9% were found.
In London, concentrations of second homes can be even greater than the coastal hot spots due to demand for pied-à-terres from long distance commuters. In the City of London nearly a quarter of all residential units are classified as second homes, with nearly 8% in Kensington and Chelsea.
The number of second homes in England rose by 2.6% in 2009 following a fall of 0.4% in 2008. This rise, which equated to 6,212 additional second homes, pushed the total to an all time record of 245,384, the research also shows.
Bailey said there are four clear reasons for the upturn in demand for second homes. First of all renewed economic and consumer confidence in early 2009 encouraged more affluent buyers to reconsider purchases they had put on hold in 2008; very low interest rates has encouraged demand from wealthy buyers; a weaker pound has made house purchases in the Eurozone more expensive and encouraged buyers to look at second homes in the UK; and very weak returns on cash investments and nervousness over equity market volatility is driving investors to consider property investment options again.
‘Wider social trends have been pushing the demand for UK based second homes over recent years. There is a perception of a green credential that attaches itself to holidays in the UK, in addition, the localism trend, popularised by programmes like River Cottage has also encouraged an exploration of more local holiday options. In 2009 these trends combined with the staycation mood to drive demand,’ explained Bailey.
Looking forward, Bailey believes that growth in demand will continue but the potential growth in second home numbers will be determined by the supply of properties for sale. ‘Early indications this year suggest that supply in the main second home hotspots is still 20% below the long term average,’ he added.