Demand for a life in the east sees region’s house prices soar during 2016
- Credit: Steve Adams
Burgeoning demand for a life in Norfolk and Suffolk and a lack of homes has pushed the region's house prices up by more than 10pc this year – almost twice as much as the rest of the UK.
From December 2015 to October this year, the average house price in the east of England jumped from £252,915 to £279,148 – an increase of 10.4pc.
At a county level, this included a rise of 8pc in Norfolk – up to £211,130 – and 8.9pc in Suffolk – to £227,922 – rises which both sat above national growth of 5.7pc.
Housing experts have put the rapid rise down to a growing desire to set up home in the east – and a lack of bricks and mortar ready for buyers.
Jonathan Wood, manager at Sowerbys estate agents, said: 'Norfolk has enjoyed economic growth and confidence with projects including the Norwich Northern Distributor Road (NDR).
'We have certainly seen people in the region buying second homes with a view to move when they retire, which is pushing up prices, and there has definitely been a lack of supply.'
In Norfolk, the biggest increase was seen in south Norfolk, where an average home now costs £245,771 – up 10.2pc, or £22,724, on the £223,047 figure from last December.
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Alex Parish, associate director at Whittley Parish estate agents in south Norfolk, said the district's proximity to Norwich was part of its appeal.
'We are seeing the same popularity with Kent and Essex, which have good transport links into London,' he said. 'Prices in areas around Cambridge are rising, and it seems the same is happening around Norwich.'
But Breckland, Norwich, West Norfolk and Broadland also rose quicker than the national average, with rises of 10pc, 9.2pc, 8.2pc and 7.6pc respectively.
It was three of the region's coastal districts that saw the least change – average house prices in Great Yarmouth rose by just 4.3pc (£6,400), 4.1pc in Waveney (£6,984) and 5.4pc in North Norfolk (£11,732).
But Jeff Cox, director of Henleys Estate Agents in Cromer, said demand in the district remained high, with its 'value for money' attracting buyers from around the country.
'There are lots of factors why house prices are rising,' he said, 'but one is that the baby boomer generation are looking for a slower pace of life.
'North Norfolk is always featured in the news as a nice place to live and demand has become very high, with low stock levels.
'People living down south can sell their three-bedroom for half a million pounds, and buy another in Norfolk for less than £250,000.'
House sales in the east peaked at 13,804 in March, when buy-to-let investors accelerated their purchases ahead of a stamp duty rise in April.
The New Anglia Local Enterprise Partnership (LEP) has pledged to build 117,000 new homes in Norfolk and Suffolk before 2026 as part of a strategy for the area.
Nationally, the government has set of a target of one million homes by the end of 2020 – 200,000 a year.
With the construction industry facing shortages in materials and skills and the red tape of the planning process, it is a figure which has been branded untenable.
City's attractions sees prices boom
An average house in Norwich now costs £194,111, £16,000 more than the figure from last December, which sat at £177,726.
Experts put the 9.2pc jump down to demand for the Fine City from buyers living in Cambridgeshire, the Home Counties and London.
Jonathan Wood said: 'Prices here are still good value. People living areas further afield are realising how affordable the cost of living here is and I think that's why we have seen prices in the city shoot up so high.
'More jobs are being created, the NDR is being built and the promised better rail links are attracting people.
'There is also an element of people wanting a lifestyle change and a better life for their children.'
During 2016, the highest number of house sales – 364 – in Norwich came in March. Sales then dropped to just 93 in April.
Are rising house prices good or bad?
Traditionally, rising house prices and consumer confidence have gone hand in hand, creating an image that booming prices are to be welcomed. Often treated as an indicator of a strong economy, rising prices are generally hailed as a sign of recovery, and falling ones a marker of a depressed market.
Studies have shown that rising house prices do generally encourage consumer spending, leading to higher economic growth, while a sharp drop can knock confidence and discourage more construction.
For the proportion of the nation who are homeowners, rising prices make their bricks and mortar worth more, and allow them to realise the capital in their home through selling or downsizing.
But for buyers – especially those looking to own their first home – rising house prices can make getting their foot on the property ladder even more unlikely.
This means both private rents and levels of homelessness remain high.
Young people taking out huge loans to buy a home are also left more vulnerable to financial shocks, such as redundancy or interest rate rises.
Growth predicted to slow next year
Prices are likely to rise marginally over the coming year, marking a sharp slow down from 2016.
Halifax's annual forecast yesterday revealed that a slowdown in economic growth, potential rises in unemployment, subdued construction and pressure on household incomes are likely to put the brakes on the property market.
A predicted rise of 1pc to 4pc suggests that the average house price in Britain will circle around £220,000 to £226,000 next year, higher than the current £218,000.
Jonathan Wood said: 'Next year is an uncertain market with Brexit and when Article 50 will be triggered, while interest rates will probably remain low.
'We will see more stock come to the market next year, which will slowly subdue rises.'
The prediction is echoed by other forecasters including Nationwide, which said it was expecting a gain of about 2pc in 2017.
• Have you been affected by rise in house prices? Write, giving full contact details, to Letters Editor, Prospect House, Rouen Road, Norwich NR1 1RE