After an unsteady year in Oxford’s residential property market in 2015, Penningtons Manches’ real estate team considers the current appetite of buyers in Oxford for the year ahead.
2015 was a year of unease in the residential property market. The stamp duty land tax (SDLT) changes in the 2014 Autumn Budget negatively affected houses selling over £925,000 and caused prices over £250,000 to increase. The Bank of England’s threatened interest rate rise worried borrowers while the uncertainty of the election put a hold on decision-making. According to Knight Frank: Oxford Market Insight 2016, annual growth in Oxford dropped from 6% in 2014 to 1.3% in 2015. So what might this year hold?
The introduction of yet another stamp duty regime affecting the investment and buy-to-let market comes into force on 1 April 2016. An additional 3% stamp duty will be payable at each threshold taking the top bracket from 12% to 15% stamp duty.
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*Transactions under £40,000 do not require a tax return to be filed with HMRC and are not subject to the higher rates.
Knight Frank predicts that market activity is likely to be strong in the early part of 2016 as buyers seek to complete their deals ahead of the new regime. Other predictions err on the side of caution anticipating that either vendors will reduce their prices or future tenants will be forced to swallow increased rents.
In 2015 the new Oxford Parkway Station - Marylebone line opened reducing the pressure on Oxford station and perhaps inviting purchasers to entertain living outside the ring-road. This year the line between Oxford Parkway Station – Oxford will open which may entice buyers back inside the ring-road. And in the longer term there is the promise of a redeveloped West Gate with a sparkling, new John Lewis flagship store.
But the fact remains that the present demand for residential property outstrips the supply with stock levels down 18% on 2015 and down 21% on 2014. In the next five years, two large sites located on the city-edge are set to deliver 1,400 new homes – 900 at Barton Park and 500 at Northern Gateway. According to the background paper for Strutt & Parker’s Oxfordshire Housing debate January 2016, these sites have overcome the housing constraints by dodging “flood risks; ecological designations; and the historic built environment of the city”. But will they assist the city’s affordability challenge?
It is no secret that housing in Oxford is “beyond the limit of affordability” for the majority of residents and those working in the city. Labelled “Britain’s most unaffordable place to live” with the average house costing 16 times the city’s average salary (BBC) it is reasonable to anticipate that the level of demand for the private rented sector will continue to rise as predicted in Savills: Key Themes for UK Real Estate in 2016.
But ultimately, Oxford has a lot to offer: not only is it a beautiful place to live but it has a growing economy; the famous Oxford University; schools that show success year-on-year; renowned hospitals; and a strong London transport link. There is no doubt that the trend will continue in years to come despite the current statistics.