Since the financial crisis there has been a growing trend towards living within thriving towns and cities other than London. This has resulted in prime urban properties outperforming their rural counterparts across the UK.
Across all the prime regional markets, urban properties are now on average 4.1% above their 2007 peak. This has been particularly evident in prime towns and cities including Bath, Oxford, Winchester and Cheltenham.
Demand is strong in these locations, in part due to the high concentration of prime housing stock and good schools which make them attractive to families looking to upsize, but also thanks to a growing number of equity-rich downsizers looking to move to areas where they can have access to a range of good restaurants, shops and amenities.
An important consideration for such buyers, however, is just how much extra it costs to move to a property with more bedrooms, or how much equity can be released by downsizing, especially given the fact that in some regional cities the price per sq foot can be similar to some London boroughs.
Looking at the latest average house price trends across the country, we have calculated that the cost of adding or removing a bedroom is around £52,000 on average across England and Wales.
This figure does not take into account the added costs associated with buying a property, including stamp duty.
The regional nature of the market means that in terms of costs and savings there are large variations depending on where households are based and where they are moving to, as well as the type of properties involved, as shown in figure 4.
We also acknowledge that the size and amenities of homes with more bedrooms will generally differ from those with fewer bedrooms, and this too will be reflected in the price.
For example, downsizing from a 5-bed detached house to a 3-bed terrace in the South East could release around£263,000 in equity, based on average property prices, while downsizing from a 4-bed to a 3-bed property in the West Midlands could release £45,000 in equity.
There are also notable differences in terms of property type. Moving from a 3-bed terraced house to a 4-bed terraced property in Yorkshire costs, on average, £38,000. Making that same move from a detached property to another detached property costs closer to £50,000.
Costs are greatest in markets on the outskirts of the capital such as Elmbridge, St Albans and Guildford – perhaps unsurprisingly given average property prices tend to be higher in such locations. A full regional breakdown is shown below.
These markets have also been among the first to reap the benefits of the ripple effect of demand coming out of London. As regional economies continue to recover, more London buyers are expected to make this move.
