We speak to local experts, getting the lowdown on what to expect from the Cambridge property market in the short term and beyond
Words by Nicola Foley; Image © Bidwells
After the incredible property boom of last year, which saw house prices reach record highs nationally and jump 7.7% in Cambridge, a question mark loomed over what 2022 would hold. As interest rates rose, the stamp duty holiday ended and the traditionally quiet new year period arrived, many anticipated a cooling – or at least stabilising – would take place. But here, the opposite is proving true.
“At the start of this year, we saw double the number of property valuations compared to 2021 or 2020,” comments Richard Freshwater, director at Cheffins. “Houses are selling like hot cakes.”
On the face of it, this might be good news for homebuyers – after all, more properties mean more choice – but the mood in the local market is currently one of urgency, says Richard. He explains: “On average, we see 30-40 viewing requests, for properties in all sectors of the market. The defining factor is the massive imbalance between supply and demand.”
This fierce competition has been driven, in part, by a flood of buyers from London – but also by the same lifestyle factors that encouraged people to move after the first lockdown, according to Ed Meyer, head of residential sales at Savills.
“Buyers continue to be motivated by the increase in homeworking, the need for more space and the desire to be close to the countryside,” he explains. “As a result, we’re arranging around double the number of viewings than we normally would for this time of year, while the number of buyers registering with us is also substantially higher.”
Worryingly, this sky-high demand is coupled with a lack of good-quality housing stock, warns Andrew Tucker, partner at Bidwells. He believes that the ‘supply crunch’ will continue, leading to further price rises in both the sales and lettings markets. The shortage of properties is especially acute in the second-hand and country homes market, which has led to increased demand for new-build homes in the area. In fact, during 2021, the price of the average new home in Cambridge rose by 5%, according to research from Bidwells, which is the highest pace of growth for such homes since 2016.
Another consequence is that homebuyers are being “less fussy” in terms of location, asserts Richard Freshwater. He explains: “Villages which perhaps used to be less popular due to commuter links are now seeing renewed interest – and these are experiencing the same levels of demand as some of the most popular locations in the city centre.”
The season ahead
Andrew Tucker believes the market in Cambridge will remain strong as we head into spring, driven by the city’s thriving business community. “With government guidelines easing, and travel resuming, it’s likely we will see even more people migrating to Cambridge to rent or buy properties,” he predicts. “Until recently, many companies have curtailed business travel and relocation unless absolutely necessary. But, with enterprises keen to bring collaboration back into the office, and a continually booming micro-economy in Cambridge, our markets will remain as buoyant as before.”
Ed Meyer, meanwhile, thinks any potential lull in the local market should be countered by the rush of summer movers keen to be ensconced before school starts in September, adding: “For the time being at least, the market remains extremely healthy. And there is a large pool of highly motivated buyers who are ready, willing and able to move.”
Richard Freshwater agrees that all signs are good for a flourishing spring, forecasting that London leavers will continue to dominate. “Hopefully, there might be greater breathing room as more houses become available to buy,” he adds. “Many people who were considering selling a year or so ago, but put their move on hold mainly due to Covid-19, now appear to be getting on with their lives and making the jump to selling.”
If this fresh supply of homes does arrive on the market, it could be a lifeline for first-time buyers who are struggling to compete in the current climate. While the stamp duty holiday was designed for people in this position, its benefits have been largely eradicated by soaring house prices. The increasingly tough conditions for first-timers mean that more and more are considering alternatives, such as shared ownership, which is on the up in our city.
“Cambridge is one of the most expensive places in the country to live. This makes it difficult for first-time buyers to raise enough for a deposit – but shared ownership offers the opportunity to purchase part of a property and get on the housing ladder with a smaller deposit,” comments Matthew Barber, mortgage manager at The Cambridge Building Society. “They will usually also pay rent to the housing association that owns the rest of the share,” he continues. “Most schemes allow the buyer to increase their share in the property in the future. This way of getting on the ladder has become a popular alternative to traditional mortgages.”
Elsewhere in the world of mortgages, The Cambridge reports that there’s been no dampening of demand since the base rate change in February – although it warns this may shift if we see more increases during the year, as the cost of borrowing rises.
“We expect fixed-rate products will become more attractive as homeowners look for consistency of monthly mortgage payments – especially at a time when other bills may be increasing,” adds head of lending Tracy Simpson.
Beyond spring, what happens next could be down to inflation, and government measures to counteract it. “Unless it is controlled, interest rates will continue to rise,” warns Richard Freshwater. “However, they are currently so low that small rate rises are making little difference to the market, and there are still some amazing five-year, fixed-rate mortgage deals out there for the taking. We hope to see more houses become available – this will be the only way for the market to level.”
Andrew Tucker, meanwhile, suggests that we can’t ignore the potential impact of a financial ‘payback’ from Covid-19. “This may well have a short, temporary impact on local markets, but it is difficult to see this being significant, as the continued issue of supply and increased demand will also be a key driver.
“That said,” he concludes, “Cambridge has, historically, been relatively resilient to global economic downturns, and there is nothing to say it won’t fare the same in the years ahead.”