Regional Focus : Brighton
Property demand in Brighton and Hove has rocketed thanks to the overspill from London with asking prices proving resilient thanks to homeowners' question for affordable housing.
Brighton and Hove has long been described as London-on-Sea, and it’s easy to see why. The area has all the good bits of the Capital at affordable prices - a wide selection of shops and eateries, nice parks, good schools and, of course, the beach and sea air. And everything is on a much more manageable scale, too – it takes just 20 minutes to drive from one side of the city to the other and in terms of public transport, trains can get you into London in around an hour and local buses are clean, frequent and affordable.
Brighton and Hove is a service economy. Of course, there’s a big, somewhat seasonal, leisure sector here, but there’s also a very large community of graphic designers, marketing firms, film-makers, web developers, journalists, writers and actors to boot. It’s a healthy place to live, too - Brighton recently topped a poll as the place with the most people describing themselves as happy: 94% compared to the UK average of 85%.
And there is no shortage of these happy people to buy and rent property, with lettings business now thriving. According to Brighton & Hove City Council, the amount of private rented properties in Brighton & Hove is 21% - twice as high as the national average. This comes as no surprise, given the local universities – the University of Sussex and the University of Brighton.
Meanwhile, sales business is being fuelled by homeowners’ desire to relocate, particularly from London.
As Paul Bonett, director of Brighton-based agency Bonett’s, explains: “People are not prepared to pay top prices in, for example, London, but they are prepared to pay sensible money to move.” But there are also clients who don’t have the luxury of choice and need to downgrade.
Bonett says he’s seen a few deals fall through due to the precariousness of sellers’ job situations, caused by the credit crunch.
This, of course, is not an issue specific to Brighton.
The growth in London house prices over the last 12 years has fuelled those in Brighton.
Hometrack data shows that prices rose by 23% in Brighton & Hove between April 2006 and 2008, compared with 19% in the South East and in England.
Meanwhile, Land Registry data shows that prices more than doubled between April 2000 and September 2007.
The Land Registry shows that prices are holding relatively stable, if not growing.
Between September 2007, when we can consider the credit crunch to have begun, and April 2008 - the latest available data – the Registry shows a 1.8% growth in house prices.
This compares with a 9.7% growth for the same period in 2007.
So, according to this data, while prices are not increasing as fast as they were, they are still going up, contrary to the public’s assumption that ‘slowdown’ means that house prices are in reverse, which as we can see from this data, is simply not true.
The current market downturn is having a dire effect on all agents’ businesses, with news of redundancies and office closures a frequent occurrence.
And the pressure is on for those remaining. Charlie Snell of the recently closed agency Brighton & Hove Family Homes, claims to have been told about a large corporate agent, which has transferred all of its staff onto commission-only packages and instructed them to make 50 cold calls a day.
Prior to his business closing, Snell’s stock of properties had an average asking price of £511,000, with new applicant registrations in May double to what they were in the same month last year, yet with the same size stock.
He says: “Applicants – even ones that have been registered with us for a long time - were, surprisingly, still looking and still interested in buying a property.
“But we, along with other agents we’ve talked to, saw asking prices getting reduced, with only competitively priced properties selling.”
Offers that previously would have been considered insulting at worst and ridiculous at best are now being made, and in some cases accepted, Snell explains. He recalls one property that was recently on the market at £420,000, ‘sold’ for £410,000, fell through, and was then put back on the market for £370,000.
“So, despite year-on-year price increases, reductions are not uncommon at the moment.” Bonett concurs: “Prices have declined by around 10% in the last three months and they will probably decline further because of the unrealistic pricing still going on.
“I don’t think many agents are prepared to be as blunt as they need to be with their clients, who are actually fine about reductions; they read the papers and know what is going on in the market.”
But Justin Lloyd, managing director of Brighton-based agency 4 Sale, says that he and his team have to work hard to ensure that sellers are realistic about pricing.
Lloyd, who relocated from London to Brighton and bought 4Sale last October, says: “Previously, agents in Brighton expected clients to come walking through the door; now it’s very much about keeping in touch and being much more proactive with them.”
But he agrees that while business is slower, it is not all doom and gloom and properties are still selling if the price is right.
“We have more instructions on our books now since I bought the business last October, but you would expect that, given the market.”
He suggests that this is not necessarily reflective of buyer caution, but simply a case of it being a buyer’s market and buyers undertaking more viewings than they would have done at the height of the market because of an increase in available property.
And what better place to look than in a city boasting the sea and South Downs close by, and competitive asking prices, too?
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