Development planning Residential

Oxford vs Cambridge: who will win the property race this year?

Q2 2019

Following milestone announcements including East West Rail, the Oxfordshire Housing & Growth Deal, and an ambitious programme to build one million homes in the Arc by 2050, Oxford and Cambridge go head to head in the property race.

William Nichols

Senior Associate Director, National Development and Planning

+44 (0) 779 654 6353

OXFORD

Residential property, Planning & Development

Giles Lawton, Head of Strutt & Parker Oxford

  • Infrastructure improvements are a clear indication of the government’s commitment to the city; major changes in the region over the next thirty years
  • marked increase in sales agreed within Oxford during the first 7 weeks of the year
  • Oxfordshire Housing & Growth Deal will help shed light on new home vision

“Despite the turbulent political climate, Oxford remains a principal destination for families and businesses alike. Infrastructure improvements are a clear indication of the government’s commitment to the city, and therefore maintaining buyer demand and stable house prices. These major improvements remain important to the overall health of our property market; they make economic fluctuations feel less exaggerated, creating a safe haven. Investment to our road and rail networks all help to generate a sense of things happening and evolving, making the city an exciting place to be right now.

“Investors and developers will always be drawn to a major university city like ours, seeing potential not just in the student market, but as a business leader in science and innovation. The Autumn Budget last year announced £20million of funding to develop a strategic business plan for the central section of East West Rail, drawing new attention to the Oxford-Cambridge Arc. The government aims to connect and develop these hubs to create a science and technology powerhouse. If realised, this ambition will mean major changes in the region over the next thirty years, including three major infrastructure projects: a new East West Rail line connecting Oxford with Milton Keynes, Bedford and Cambridge; an Oxford-Cambridge Expressway; and an ambitious programme to build one million new homes in the Arc by 2050.

“A fast and efficient rail link between two world leading University cities would undoubtedly forge even closer links. The East West Rail line would be especially important to the burgeoning commercial partnerships that both institutions are developing. The highly competitive world of scientific research is increasingly allied to Universities and this rail link may be key to the UK competing with the US and Far East. There would also be the commercial benefit for tourists being able to travel much more efficiently between the centres, currently an approximate 5 hour coach journey or a 3 hour train ride.

“Of course, the big question is where are all these homes going to go? This may become clearer during the development of the pan-Arc spatial vision – the mechanism for coordinating investment in housing and infrastructure, while ensuring growth is environmentally sustainable. In the shorter term, the Oxfordshire Housing & Growth Deal secured £215 million of government funding earlier this year to help address the severe housing shortage in the county. The Deal aims to deliver 100,000 homes by 2031.

“From what we know already, when major rail improvements take place, an uplift both in buyer demand and economic sentiment will follow. This was seen in the completion of the railway extension from London Marylebone, linking Oxford Parkway to Oxford city station. This means you can now get from Parkway to Marylebone on the Chiltern line in just under an hour, giving anyone in the north of Oxford an alternative to battling into the city centre; even the new station car park is enormous. This was the first new station linking a major city to London in 100 years! The news of its arrival resulted in considerable demand for houses on the north side of the city - suburbs like Summertown, and the villages surrounding.

“Our buyer demographic here is often young families, attracted to top rated schools including Wolvercote Primary, Cherwell Secondary, Dragon School, Summer Fields, Oxford High School for Girls, and St Edward’s. Often they might have studied at the University here, returning with fond memories of their under-graduate days looking for similar lifestyle for their children. Oxford has a city feel with access to the countryside, yet with a commute back to London under the golden hour ideal for working parents. More than half of our clients are families from London keen to relocate. They focus on North Oxford.

“House prices remain steady, with high demand for ‘the right thing at the right price’. For example, we had two houses attracting competitive bids in the latter stages of 2018. This year has started well, with a marked increase in sales agreed within Oxford during the first 7 weeks of the year compared to the same period in 2018. These range from a pretty two-bedroom cottage in Jericho at £550k to a brand new family house in one of the popular North Oxford side roads; 29A Apsley Road sold swiftly at the full asking price (£1.6m) to a lovely family, with strong Oxford connections, returning to the city from the US for schooling. The most expensive rate per ft. sq. is in Norham Manor. Leafier Summertown is full of fine Victorian and Edwardian houses. In the villages surrounding Oxford, those with good rail connections and close to top schools remain the most popular destinations, such as the Milton’s, the Haseley’s, Bletchingdon, Combe and market towns like Abingdon, Woodstock, Thame and Charlbury.”

Planning & Development

Piers Beeton, Senior Associate Director at Strutt & Parker Oxford

  • Oxfordshire Housing & Growth Deal affecting local developers and reducing number of planning applications
  • Help to Buy reforms in 2021 higher on developers’ agenda than Brexit concerns

“We are in a unique scenario in Oxfordshire at the moment with the Oxfordshire Housing & Growth Deal, with a commitment to build 100,000 new homes to help address the country’s severe housing shortage. The Deal has also offered the Oxfordshire District and City Councils protection from speculative planning applications from developers by lowering the usual need of displaying a 5-year housing land supply to 3 years’ before the National Planning Policy Framework’s presumption in favour of sustainable development applies. This aims to offer councils greater time to update their local plans and to support a more strategic approach to development through strategic allocations. However, it could be argued that this has resulted in a slowdown in housing delivery as speculative planning applications are no longer being pursued by developers and local authorities are reliant on complex large scale housing allocations, which often fail to deliver housing at the anticipated timescales.

“It is notoriously hard for first time buyers within Oxford City. Phase 1 at Barton Park being developed by Hill Residential is offering properties on a Help to Buy basis and Cala Homes have just started on-site at Wolvercote Mill. But the common consensus is that not enough development is taking place around Oxford City and it is something that the Growth Deal and surrounding authorities are trying to address.

“It is an unknown at this stage how Brexit will impact the development industry; it is an industry that thrives on certainty but we are still achieving record values and strong interest in many of our sites. From speaking with developers on a day-to-day basis, the Help to Buy reforms in 2021 seem to be higher on their agenda.”

CAMBRIDGE

Residential property

Michael Houlden, Head of Strutt & Parker Oxford

  • Flood of new developments keeping supply up and preventing house price rises

“House prices have plateaued over the last 12 months continuing the trend of the past two or three years. Similarly, I don’t expect prices to rise in the next year, although many consider it to be a good time to buy – uncertain economic conditions mean that we are unlikely to see the sort of prices that we saw 5 years ago. Notwithstanding local businesses’ concerns about the ability to retain and recruit non-British EU citizens, the local economy remains buoyant and demand remains for housing close to local areas of employment.”

“New homes on developments on the edge of the city at Trumpington, Darwin Green, and new settlements such as Northstowe and later phases of Cambourne have led to the market being flooded with new developments, and this, combined with political uncertainty, has halted the over inflation of house prices. Although there are a few help-to-buy schemes in the city, it remains one of the most unaffordable in the country.

“The prevailing view is the uncertainty around the country leaving the European Union has led to some degree of caution in the market but in the main, people appear to be just ‘getting on with things’ in terms of the purchase of houses. We find most people are moving for lifestyle reasons such as schooling or a new job, so remain immune to geo-political factors.

Planning & Development

William Nichols, Senior Associate Director at Strutt & Parker Cambridge

  • Accelerated development pace - proposals to extend St Neots and Alconbury, as well as a large residential development near the airport
  • Reflected in Homes England sentiment, who recently said, “We’re using our land, finance and expertise to speed up the delivery of new homes.”

“Housing developments continue in and around the city including at Trumpington Meadows to the south of the city, the Wing development for up to 1,300 home to the north of the Airport in the east of the city, and at Darwin Green and Eddington to the north-west of the city. In addition, we are now seeing the first completions at Northstowe and new settlements are planned at Bourn Airfield (to the west) and Waterbeach to the north. Further afield there are proposals for large extensions to St Neots, and Alconbury, as well as on Ministry of Defence land.

“The proposal to create a Cambridge to Oxford expressway has certainly helped the momentum here. Highways England recently published its preferred route alignment for an upgraded section between Black Cat and Caxton Gibbet – when completed it will provide an expressway standard road between Cambridge and Milton Keynes. The upgrade of the A14 to motorway standard between Fen Ditton and Brampton is well underway and completion is now expected in early 2021 The East West Rail Company recently consulted on five route options for the missing link between Cambridge and Bedford, two of these options involve a new station at Cambourne, and three involve a new station at Bassingbourn. This will provide the Cambridge area with direct links to Milton Keynes and Oxford as well as providing better interchange opportunities with other main lines out of London. Work is being developed by the Greater Cambridge Partnership on CAM metro and a new busway between Cambourne and Cambridge – this could involve an underground section avoiding street-running in central Cambridge.”

Lettings

Sarah Smith, Head of Lettings at Strutt & Parker Cambridge

“The Government’s 3% stamp duty on second homes has put off a large proportion of our traditional buy-to-let investors. The forthcoming fee ban could lead to more movement in the market but it isn’t clear whether the administrative costs will be passed on in other ways by landlords through rent increases. Once the dust has settled on this, I expect normality to return. It’s clear the government want to help tenants as Generation Rent grows – the new Fitness for Human Habitation Act is a great example. Generally speaking, the University and jobs market here keeps our lettings market robust.”


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