What is happening with Oxford house prices?

In my article last week, I promised to widen the net of my research to see whether there was a noticeable trend in the way house prices around Oxford are currently performing.  The table below summarises the findings of my research, using Rightmove data for houses that sold and were listed over the last 12 months.

The recent reports by the Royal Institution of Chartered Surveyors (RICS) states that the slowdown in the housing market is spreading from London to other parts of SE England.  It also observes that the most expensive homes are particularly likely to have seen cuts in asking price before being sold.  RICS points to a series of changes to tax policy which has particularly impacted buy to let investment, and a continued lack of new-build properties weighing on the market.  Other commentators have pointed to stamp duty discouraging older owner-occupiers from down-sizing as another drag on house availability.

Looking at Oxford specifically, there is evidence that the most expensive parts of Oxford are under-performing.  The notable exception being Cumnor, where some new build and strong activity have impacted the overall trend for that part of town. Whilst overall, there is a stronger trend of house price growth in the parts of Oxford which are below City average values, it is a very mixed picture.  Headington, Blackbird Leys and Greater Leys have out-performed the City average whilst Wolvercote, Marston and Cowley are close to the overall average, with Botley and Barton performing particularly poorly when compared to the prior 12-month period.

Of course, when looking at data like this it is important to consider the local factors that could have affected housing prices.  For example, Wolvercote has recovered from a negative position 12 months ago, reflecting the completion of road works that had previously dragged on prices.  Barton, may well be experiencing some drag due to the new houses coming on stream, causing people to delay their move waiting for the new stock to come on stream, or avoiding the area due to the works.

Overall, there is some evidence that it will be the top-end of the property market in Oxford that will feel the pinch earliest.  And, as I have commented over the last several months, Oxford is experiencing a 19% reduction in house sale transactions, and continues to suffer from an under-supply of new build homes.  There are some vendors who are also disregarding the price sensitivity in the market, holding-out for unrealistic offers, in a market that has become far more price sensitive.

Across these parts of Oxford the average increase inhouse prices over the last 7 years is 14.9% which rises to 18% if Boars Hill is removed from the calculation.  Oxford as a whole has averaged 20% increases since 2014.

In summary, it is far too soon to panic, but vendors need to be realistic with the price they offer making sure they benchmark well with comparable properties on the market.

Rental trends reported by RIghtmove

Based on Rightmove data, there are 12% more properties available for tenants to choose from compared to the first quarter in 2016.

Nationally, it is taking 10% longer on average to secure tenants than during the same period last year.

In the SE of England, compared with Q4 2016, there has been a 1% reduction in average achieved rent, whereas compared to the same period last year rents are up 1.3%.

Oxford typically tracks the London market quite closely, albeit with a lag and with lower valued peak rents.  Looking at London, compared with rents in Q4 2016, rents in Q1 2017 are up 1.5%, however, when compared to the same period in 2016 rents are 4.2% down.  To date, Oxford rents have held-up well, however, properties are currently taking longer to let than during the same period last year.  Following the buy to let buying spree in March last year, those properties are now coming available, increasing the availability of properties and offering tenants more choice.

Will Oxford experience the falls in rent experienced in London?  Well, I don't have a crystal ball, but on balance I'd predict a period of low growth in rents and for some properties stagnation.  However, I would expect demand to hold-up reflecting the under-supply of homes and the strong fundamentals of the City's economy.

I expect one bedroom properties to hold-up the best with larger properties from 2-bed apartments upwards taking a little longer to let.  Landlords should not panic, but should be open to accepting offers from tenants, recognising the benefit of prolonging a void period.

Demand for professional HMO properties is likely to remain strong, with tenants demanding a high quality of fit and finish, and good quality, well-equipped communal areas and en-suite facilities.

Rooms  without en-suite facilities, or within homes that are rather tired in terms of interior décor and facilities are most likely to be hit by the reducing demand given the narrowing of the gap between top-priced rooms and one-bedroom and studio apartments.  The cost of renting a room in Oxford is very high, and I'd expect to see some.