In the last 15 years how has the property market developed in the North East and have there been any fundamental changes?
The late 1990s saw the impact of planning changes, which put a greater emphasis on redevelopment of brownfield sites, inner cities and urban areas. This lead to significant investments within urban centres, which are well documented throughout the Quayside and Newcastle, as well as river frontages in Sunderland and many of the market towns in the North East. Obsolete garages, petrol stations, cinemas and even police stations have been demolished and now provide superb luxury apartments and city living homes. There is no doubt that the last 15 years have seen a significant move away from the typical four-bedroom detached house on a new estate, with a single or double garage and a family garden. The cross section of buyers has diversified significantly, as has the demographics of buyers, with greater numbers of people having holiday homes or work flats and unfortunately there are a greater number of divorcees and single parent family homes.
What remains the biggest challenge for the property market in the North East and its greatest opportunity?
Recent studies in the North East indicated that over 90,000 are now on a waiting list for homes. The target that councils have been set throughout the North East in recent years has, with few exceptions, never been met. The region is significantly underperforming on its construction of new homes and we are building an ever-increasing pressure on the existing housing stock, which is leading to prime areas seeing significant house price rises. The opportunity now exists for builders to react to this and create greater opportunities for new homes within the area. Residents need to remember that many of the suburban areas of cities were previously farms and it is natural progress when the population expands that we should create greater numbers of houses. This demand is real and needs to be satisfied in the next 10 years. Planning departments need to encourage people to submit land for residential redevelopment and that land has to be sensibly priced if we are to build an affordable and comfortable family home for the future.
Will Help to Buy help or hinder?
The government needed to find a stimulus to bring back the confidence in the housing market. Some people thought the answer was to abolish Stamp Duty. The government decided that the Help to Buy Scheme was a greater stimulus, encouraging those with low deposits to come back into the housing market. Early indications are that this will prove to be very successful and with only a five percent deposit and 20 percent backed by the government, clients can now afford to move. It is a great opportunity and a fabulous time for buyers in 2014.
In the last five years what has the economic downturn taught property professionals?
To stop being so arrogant! Since 2007 there are many people who have seen confidence levels plummet beyond expectation and I remember clearly in six months of 2008 the housing market appeared to trade with about 20 percent of its normal volume. At these levels of turnover people were hardly able to pay rent and rates never mind their staff. Ultimately it is the job of the government and the Bank of England to control the economy and to stop the great swings between boom and bust. Regionally, property professionals have learnt a great lesson and it is essential that we now trade with honesty, that we encourage modest growth which is affordable and that we act responsibly to ensure that our housing market remains stable.
With your crystal ball in place how do you see the North East property market developing in the next five years?
The supply of quality homes in key areas and popular residential districts will fall and undoubtedly pressure to buy will increase, leading to house price rises in very popular locations. The region as a whole will see increases in prices and this will be partly restrained by possible interest rate rises, although not for a little while yet. The North East continues to rely upon a relatively small number of blue chip companies, PLCs and large employers, within the private sector. We must therefore make every effort to expand our manufacturing and engineering businesses and use the great charm of the local workforce, as well as our entrepreneurial skills, to win greater business outside of the region. It is imperative for the North East that we see economic expansion and by doing so we will continue to be one of the most fortunate of regions within the country, enjoying magnificent countryside, beauty, history and happiness within the workplace.
Can planning laws and regulations help and hinder growth and how would you advise the Government of 2015 (whatever result) to assist the housing issues as you see them?
The fundamental problem with brownfield and urban regeneration was the need to sell off-plan, since few of these development sites could be occupied by any resident until the whole building was sold, and therefore cash flow relied upon sales off-plan, which were often sold time and time again to investors. We need to develop a greater number of greenfield sites and expand some of the traditional villages throughout the Northumberland and Tyne & Wear districts, especially those that have good transport links, schooling and infrastructure. Modern architectural design and energy efficient housing can create a significant cost saving and planners should actively encourage such styles of design and housing within the region. I very much hope that the government of 2015 will be a majority government and one which will have power through its Members of Parliament to actively drive further economic change, prosperity and good business sense throughout the country. The housing issue remains the greatest of those focuses, since with good housing demand and confidence the economy can expand and people feel better. It is imperative that our interest rates remain at an affordable level and it is imperative that we have increased supply and choice of housing. This can only be achieved with the government working closely with planning departments to make more land available.
What is your biggest challenge and biggest hope for 2014?
To keep the momentum going, to avoid financial cracks or false stop/start confidences. My hope for 2014 is that we continue to grow in a steady and responsible manner. There is no doubt that the recovery of the housing market is taking place, but it won’t and shouldn’t take place in one year. It should take place over the next two to three years, be gradual and sensible, and most importantly affordable for those that need a home.
Duncan Young of Sanderson Young www.sandersonyoung.co.uk