It’s well documented that that living by the sea comes at a cost and our research shows that a clear premium is paid by buyers for houses in close proximity to the coast. On average, according to the Knight Frank Prime Waterfront Index, prices for prime coastal properties are as much as 71% higher than comparable properties located just a mile inland.
But as well as a price premium, our research points to a number of towns and cities along the Devon, Dorset and Cornwall coast which have surpassed the wider property market over the last two decades in terms of price growth.
Using data from the Land Registry, based on actual sales volumes going back to 1995, we have calculated the annual price performance of individual coastal markets relative to the average price increase across the three counties.
COASTAL HOTSPOTS
Croyde in North Devon has been the best performing coastal market over this time, with annual outperformance of 4.1% on average. While this may seem relatively muted over the course of a year, over 20 years this equates to cumulative price growth of around 122% above the wider Cornwall, Devon and Dorset area.
Over the past two decades, Croyde has seen prices more than quadruple, by 432%, compared to 310% combined across the three local authorities.
A number of other long-established prime markets including Rock, Salcombe, Padstow and Falmouth feature in the hotspots identified in the research, and have all experienced outperformance of at least 2% annually since 1995 according to our analysis.
Price growth and outperformance can be very location specific. For example, the average annual price outperformance for the top 15 best performing small coastal towns and villages has been 2.8%, compared with 2.6% for medium sized coastal towns such as Christchurch, Topsham and Lyme Regis and 2.5% for the top five large coastal towns or cities including Bournemouth and Exeter. Higher outperformance in smaller settlements since 1995 is likely to be related to the scarcity of available stock relative to demand.
DEMAND
Demand for prime coastal property comes from a variety of sources. Such markets benefit from their appeal to upsizers and downsizers often moving within the local area or looking for a lifestyle change, as well as second and holiday-home buyers.
OUTLOOK
The announcement in the Chancellor’s 2015 Autumn Statement that a higher rate of stamp duty would be introduced for “additional properties”, including second homes, from 1 April 2016 prompted a number of purchasers to bring forward deals ahead of its introduction.
In the short-term, it may take time for the tax to be absorbed, especially in a market where there are notable levels of discretionary purchases. In turn, this may have an impact on pricing – potentially providing opportunities for committed buyers.
Over the longer term we believe transaction volumes will rise once the additional stamp duty is fully priced into the market.
