savills.co.uk/research 01

SpotlightIpswich & Suffolk Coastal Residential Development Sales 2015

Savills World Research UK Development

SUMMARYA positive outlook for both urban and rural markets

■ Outperformance and underperformance: House prices in the East of England have recovered strongly since the downturn and are now 7.5% above their previous market peak. The strong Suffolk Coastal market has performed in line with the region, whereas prices in Ipswich have only just surpassed their 2007/8 peak.

■ Top of the league: Some of the most expensive seaside real estate in the UK is found along the Suffolk coast, buoyed by strong demand for family housing and second homes.

■ Seaside appeal: Alongside demand from families and second home owners, many downsizers have been attracted to the Suffolk coastal area by the quality of life offered close to the sea.

■ Development potential: In urban locations such as Ipswich, flats for singles, couples and the student market dominate, but there is a gap in this market for family housing. “Some of the most expensive

seaside real estate in the UK is found along the Suffolk coast”

■ Market variety: House prices in this area of Suffolk range from £100,000 for a small studio flat in Ipswich town centre to over £1m for a large family house and grounds on the coast.

02

Spotlight | Ipswich & Suffolk Coastal Residential Development Sales

A MARkeT Of TWO hAlveS

Across the county of Suffolk the market for new build property is now looking very positive, but the urban and rural sub-markets for new homes have experienced a very different recovery. House prices in the Suffolk

coastal market have performed strongly and are now 7.5% above their previous peak. The wider Suffolk market lags behind the Eastern region and England & Wales. Prices in Ipswich surpassed their previous market peak for the first time in March 2015.

Suffolk CoastThe Suffolk Coastal area contains some of the most expensive seaside

towns in England & Wales, including Aldeburgh where average house prices in Q1 2015 were £413,000 and Southwold where a beach hut was recently put on the market for £100,000. Towns and villages in this area have experienced a strong recovery in house prices since the credit crunch with the number of £1m+ transactions in the Suffolk Coastal local authority increasing by 125% between 2006/07 and 2013/14.

The quality of life offered close to the sea, the proximity of surrounding countryside and the low rainfall experienced by East Anglia have attracted many families and retirees to live in the area or to purchase second homes.

The most desirable detached new build family houses in these villages can command values of over £300psf. Small niche developments have been popular with buyers and in some cases command a premium over equivalent second hand properties. Ogilvie Hall in Thorpeness, a notable local landmark, has been converted into five family homes and has achieved values of around £340psf according to Savills data. This is compared to values in the second hand market which average around £270psf according to Hometrack.

Developments in premium locations are even achieving off-plan sales. For example, the Whisstocks Boatyard development on Woodbridge waterfront, due for release off plan later in 2015, is already attracting vast amounts of attention.

Downsizers have been attracted to new build housing in the area and the prospect of lower maintenance and running costs, along with the peace of mind that comes from new, high-spec appliances and a

FIGURE 2

house prices versus peak

Source: Savills using HM Land Registry (12 month smoothed)

FIGURE 1

Average new build sold price, year to March 2015

Source: HM Land Registry

House prices in the Suffolk coastal market

have performed strongly and are 7.5% above peak

£500,000

£450,000

£400,000

£350,000

£300,000

£250,000

£200,000

£150,000

£100,000

£50,000

£0Detached Semi-Detached Terraced Flat

■ Ipswich ■ Suffolk Coastal ■ Suffolk ■ East of England ■ England & Wales

Ave

rage

New

Bui

ld S

old

Pric

e, Y

ear

to M

arch

201

5

10%

5%

0%

-5%

-10%

-15%

-20%

-25%

Pric

e ve

rsus

200

7/8

Pea

k

■ Ipswich ■ Suffolk Coastal ■ Suffolk ■ East of England ■ England & Wales

Jun

2006

Oct

200

6

Feb

200

7

Jun

2007

Oct

200

7

Feb

200

8

Jun

2008

Oct

200

8

Feb

200

9

Jun

2009

Oct

200

9

Feb

201

0

Jun

2010

Oct

201

0

Feb

201

1

Jun

2011

Oct

201

1

Feb

201

2

Jun

2012

Oct

201

2

Feb

201

3

Jun

2013

Oct

201

3

Feb

201

4

Jun

2014

Oct

201

4

Feb

201

5

2015

savills.co.uk/research 03

builder guarantee. An example of this type of development is Malt Yard in Woodbridge, a development consisting of 29 1 and 2 bedroom assisted living apartments.

IpswichIn contrast, larger urban areas, including the county town of Ipswich itself, have experienced a more subdued recovery, but values are now returning and pent up demand is seeking an outlet.

Ipswich is more affordable than nearby towns such as Bury St Edmunds and Colchester. The average new build sale price last year was £237,000 according to Land Registry. In addition, as affordability has become squeezed in London, Ipswich is looking like an increasingly attractive commutable satellite town. Fast trains to Ipswich from London Liverpool Street arrive within 59 minutes. Ongoing regeneration of the town centre is encouraging economic migration to the area.

The waterfront quarter of Ipswich is the largest single regeneration project in the East of England. The extensive mixed use development project, which has now been underway for a number of years, has turned a former industrial dock into an emerging residential and commercial centre.

Meanwhile, demand for new build homes across Suffolk has improved significantly. The delivery of new schemes had stalled, but now with a strong pipeline of stock coming to the market we are seeing a good level of interest from purchasers. Landmark developments including The Mill, the tallest building in East Anglia at a total 23 storeys, and Regatta Quay, which are now nearing completion, signal to the market that the recovery has spread to this area.

Flats are the dominant new build type in Ipswich, catering for singles, couples and the student market. Prices for apartments in 2014 reached £200psf. The student population is helping to reinvigorate the area. Waterfront Ipswich is the location of University Campus Suffolk, Suffolk's first higher education institution, which has become a popular university destination within the county since it was established in 2007. Student accommodation for some of the circa

FIGURE 3

Suffolk new homes development pipeline

Source: Savills, HM Land Registry

keY

future Developments Status■ Under-construction ■ Permission ■ Application ■ Pre-planning

Total Residential units

1,000 to 2,500 750 to 1,000 500 to 750 250 to 500 100 to 250 0 to 100

Average transaction value 12 months to Mar-15■ Over £400,000 ■ £350,000 to £400,000 ■ £300,000 to £350,000 ■ £250,000 to £300,000 ■ £200,000 to £250,000

■ £150,000 to £200,000 ■ Less than £150,000

4,000 students enrolled there is just 300 metres from the water.

However, there is a gap in the market for the provision of family housing. The current housing target within Ipswich Local Authority is for the delivery of 14,000 new homes between 2001 and 2021, an average of 1,400 new houses per annum. In the last two years delivery of housing has been at the lowest level since 1998, with only 100 homes completed in 2012/13 and only 170 completed in 2013/14. Delivery has increased in the past year but there is still significant opportunity for more developments to come forward.

Development pipelineAside from the Waterfront Quarter in Ipswich there is very little in the wider area which is currently under construction as shown in Figure 3. There are a number of large sites in the planning pipeline, but there is capacity

in the area for a larger volume of development sites to come forward.Smaller sites of up to 10 dwellings are more prevalent in the area, particularly in desirable coastal towns and villages, but these alone will not fill the gap between supply and demand that has built up due to the reduced number of transactions following the recession.

Developments in Suffolk range from mainstream to prime, so we should consider both ends of the price spectrum when looking at price forecasts over the next few years.

In the mainstream markets Savills forecast that in the five years to 2019 the East of England will experience the highest growth of all regions as the ripple effect spreads out from London. House price growth of 25.2% is expected, compared to a UK wide forecast of 19.3% over the same period. The current price differential

Spotlight | Ipswich & Suffolk Coastal Residential Development Sales

04

2015

Natalie InghamUK Development 020 3107 5459 ningham@savills.com

Residential Research Residential Development Sales

Please contact us for further information

Susan emmettUK Development 020 3107 5460 semmett@savills.com @saemmett

Savills plcSavills is a leading global real estate service provider listed on the London Stock Exchange. The company established in 1855, has a rich heritage with unrivalled growth. It is a company that leads rather than follows, and now has over 600 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East.

This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.

Andy RedmanHead of DevelopmentChelmsford01245 293 293aredman@savills.com

Alex leaderHead of Residential Development Ipswich01473 234 839aleader@savills.com

between the capital and elsewhere in the country makes this the perfect time to look to the regional markets for new opportunities.

In the prime market of the wider South of England Savills forecast price growth of 22.2% over the next five years, reflecting the high level of growth already experienced by prime markets since the credit crunch. We expect the next phase of the cycle to be characterised by catch-up growth in the mainstream markets outside of London. ■

FIGURE 5

Savills mainstream five-year house price forecasts2015 2016 2017 2018 2019 5-year

East of England 3.0% 6.0% 6.0% 4.0% 4.0% 25.2%

London 0.0% 3.0% 3.0% 2.0% 2.0% 10.4%

UK 2.0% 5.0% 5.0% 3.0% 3.0% 19.3%

Source: Savills Research NB: These forecasts apply to average prices in the second hand market. New build values may not move at the same rate

25.2%Five-year mainstream

house price growth forecast for East of England

FIGURE 4

Savills prime five-year house price forecasts

Source: Savills Research These forecasts apply to average prices in the secondhand market. New build values may not move at the same rate

MIDlANDS/NORTh

20.7%

WIDeR SOUTh Of eNGlAND

22.2%

OUTeR COMMUTe

24.5%

INNeR COMMUTe

25.1%

SCOTlAND

17.5%

PRIMelONDON

22.7%

SUBURBS

25.7%