Development in Cambridge

Demand is strong from owner occupiers and investors, drawn by buoyant local economy.

30 September 2013, Words by Natalie Ingham

 

Our latest Spotlight on Cambridge Residential Development Sales examines why values in Cambridge continue to exceed the regional and national average. Download here.

House prices

Cambridge has seen the most significant price growth of any prime regional location since the downturn. Savills prime regional index shows values increased by 6.2% in Cambridge between September 2012 and September 2013, with prices in prime wards now 13.1% above their 2007 peak.

Transaction levels have recovered to 63% of their 2007 level, above the average for both the East of England and England & Wales.

Supply and demand

Restricted development has aided price increases, especially in the most undersupplied markets. New build sales as a percentage of transactions peaked in 2008 at 29.2%. Housebuilders delayed development output after the downturn due to adverse economic conditions but in the last couple of years the volume of development has begun to increase.

Limited new supply has been juxtaposed to strong employment and population growth in Cambridge. Cambridge has a very high proportion of highly skilled employees, relative to other UK cities. Specialised technology companies, predominantly based in the Cambridge Science Park, account for 19% of employment in the area. A further 18% of employment is accounted for by the University.

A strong local economy has largely insulated Cambridge from the effects of the recession. Employment growth in the city, including expansion of the Biomedical Campus, is expected to outpace both regional and national growth figures, which will in turn underpin pricing. Oxford Economics estimates employment growth of 17.6% to 2030 from the peak of the market, compared to 14.8% in the East of England as a whole.

Migration to Cambridge as a result of job creation will contribute to the growing population, expected to increase by 30,000 by 2030 and place further pressure on the Cambridge housing market.

Cambridge is also within an easy commute of London, with services to Kings Cross and Liverpool Street providing direct access to both the City and West End. This complements Cambridge’s own employment offering and further reinforces it as a desirable place to live.

The percentage of younger people within the population is predicted to rise in the next few years. Increasing student numbers will contribute substantially to population growth, following an increase in domestic and international student numbers of 20,000, or 17.6%, between 2007 and 2012 according to HESA.

Development pipeline

Cambridge is an attractive market both for owner occupiers and investors. The decline in development seen after the downturn is now beginning to reverse as both city centre and fringe schemes come forward. Cambridge City Council project that average annual housing completions will triple by 2015 compared to the 2009-12 average.

 

 
 

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