The performance of the county’s residential property market over the last 12 months appears to be bucking the national trend in places, but still faces challenges, according to the Kent Property Market Report.
Now in its 32nd edition, the report produced by Caxtons Property Consultants, Kent County Council and Locate in Kent, has highlighted that the current cost of living crisis, with rising interest rates, high inflation and energy prices, has hit the demand for homes and housebuilding performance.
Dan Thackray, chairman of Caxtons said: “The housing market is responding to how we’ve all changed the way we live and work, and the current economic pressures on households.
“Kent continues to be attractive to Londoners, especially those interested in rural locations. For these and all house purchasers, the important factor of location has in some cases changed from where the railway station is, to how good the internet speed is, and how sustainable and cheap the property is to run.
“It is hard to predict how the cost of living, mortgage rates and changes in house prices will affect housebuilding and housebuilders during the remainder of 2023 and into 2024, but with price drops levelling out in recent months, it is expected that the market will settle down somewhat during next year.”
Nationally, house prices were on average 5.3% below the August 2022 peak, according to the Nationwide Building Society, with prices having fallen for each of the last seven months, and with the weakest recovery predicted since July 2009.
However, figures from the Land Registry, which compare Q2 2023 average prices with Q2 2022 average prices, show a different picture with Kent appearing to outperform the national and regional picture. Analysis of figures shows that prices in Kent continued to increase by 2%, slightly ahead of the South East at 1.8%, and substantially ahead of the England and Wales figures of 0.1%.
The different areas of Kent show a very mixed picture. Homeowners in Dover were the biggest winners with prices up 11.7% between Q2 of 2022 and the same period in 2023, ahead of its East Kent neighbours in Folkestone & Hythe with a 3.8% rise, and 2.2% in Thanet.
Tunbridge Wells continues to perform well with average prices up 10.1% in Tunbridge Wells. In contrast, average house prices during the same period fell in Sevenoaks by 7.0%, and in Swale were down by 4.6%, in Maidstone by 3.8%, by 2.2% in Ashford, and by 1.3% in Canterbury.
While benefitting from high-speed rail connections to London, Medway continues to offer the most cost-effective house prices, at an average of £319,140, compared to properties in Sevenoaks which cost an average of £621,156, according to the Land Registry.
Average prices for new build homes and apartments have stayed the same or increased slightly in the west and north of the county and decreased slightly in the east, with the exception of Canterbury.
The challenging affordability picture and oversupply in some parts of Kent may help explain why housebuilders are reporting more difficulty selling properties on some sites, and why housing market activity has been subdued in recent months.
The sale of new homes has also slowed, with 87,010 completed house transactions in the UK in August, 16% lower than August 2022 and 1% higher than July 2023, according to the government.
The report suggests that some housebuilders have stopped buying land for the time being, despite land prices having dropped between 10% and 11% from their peak.
However, some volume housebuilders are restarting building and SME housebuilders may do so shortly as construction and labour costs level out, although financing costs are still high. As a result, more properties are expected to come onto the market in the near future.
In several areas of mid and east Kent which fall in the River Stour catchment area, the nutrient neutrality issue continues to be a problem. Although some sites are finding acceptable on-site solutions such as reed beds or constructing their own wastewater disposal plant, the nutrient neutrality problem has resulted in a backlog of applications which is taking its toll on the number of homes built.
Despite all these challenges, residential schemes continue to be brought forward and built out. The first 8,500 homes at Otterpool Park near Hythe were approved by Folkestone & Hythe District Council earlier in the year. At Ebbsfleet Garden City, 3,383 of the planned 15,000 homes have been completed, and housebuilding continues in Kings Hill, near West Malling.
Major progress has also been made on the delivery of the master plan for 1,000 new homes and 107,639 sq ft (10,000m2) of commercial space, at the harbour in Folkestone. A further 4,000-home ‘garden city’ named Mountfield Park in south Canterbury has been given the final sign-off after developers Corinthian Homes agreed to help to fund improved roads, schools and healthcare facilities.
Proposals continue to come forward for later living accommodation. Anchor Lifestyle Developments has completed construction of its 75 assisted living apartments for the over 55s in Kings Hill, and a later living community of more than 500 homes has been approved at a former gravel quarry site in Aylesford.
Prices in the rental market continue to rise and while increases may ease a little as the year continues, they are still forecast to rise 6.5% in 2023 (Savills) given the lack of homes to rent and inflationary pressure on landlords.
Rising costs, labour shortages and economic uncertainty have slowed the growth of the Build to Rent market after a rapid expansion, but nationally 50,000 were already under construction nationwide in June 2023.