PROPERTY
HUMBLE ABODE MAKING MOVES Following a turbulent period for the Cambridge property bubble, local experts reflect on 2023 in the housing market and forecast what’s to come for the year ahead
WORDS BY PHOEBE HARPER
2 023 has been nothing short of challenging for the Cambridge property market. The interest rates on mortgages have continued to rise, running parallel to rents that are still climbing steadily despite the ever-escalating increase in energy and food prices. While the UK economy may have successfully avoided a recession in the first half of the year, rising base rates amid stubborn inflation meant that the housing market continued to weather the storm. “Although the two-year fixed mortgage rate declined, the sales market experienced a notable slowdown, causing increased demand in the rental market which was already being faced with stock shortages,” observes Alex Bloxham, head of residential lettings at Bidwells. Both supply shortages and rising demand driving steady rent growth led to the average prime rent in Cambridge reaching a historic high. As Alex shares, annualised growth in the Bidwells Prime Rental Index stands at 7.5%, with one-bedroom flats experiencing the highest pace of growth at nearly 4% in Q3, reflecting a 12.5% uplift.
Intensifying the supply-demand dilemma of the local rental market are aspirational homebuyers delaying their decisions to purchase, and a burgeoning number of science, tech and medical sector workers in need of lettings. Across Q3 alone, 59% of Bidwell’s lettings targeted this demographic and that number is only expected to grow as these fields flourish. “The completion of new office and laboratory buildings in the next two years, along with significant pre-lets, is expected to attract global businesses and support the expansion of existing science and tech companies in Cambridge,” Alex comments. However, these workers also represent a portion of the population who are feeling the pinch. “Many young professionals and people with lower income jobs have gradually found themselves priced out of most of the flats and houses in the city,” says Joanna Oddy, lettings manager at Barbouris. This led to a rise in people exploring communal living options and houses in multiple occupation (HMOs). “At the same time, we have witnessed a marked difference in the amount of high-quality HMOs available in the area,” she continues. “Landlords are increasingly treating HMOs the same as single let properties, making them as beautiful and homely as possible with the goal of creating a comfortable and inviting environment for long-term tenants to cohabit.” SELLING UP On the sales side of the coin, the year got off to a promising start with strong activity
HOMESCAPE A Cambridge-based property sold by Bidwells (above) and an HMO let by Barbouris (right)
levels that were a promising rebound in the aftermath of the Mini-Budget announcements of 2022. “The residential property market went particularly quiet in the final quarter of 2022 but we were encouraged by the bounce back in activity levels through to March/April 2023,” recalls Andrew Tucker, Bidwells’ head of residential sales. “As further interest rate rises were implemented, there was a rush to secure loans at sensible levels and fix in before they rose any higher.” Although this may have fuelled levels of activity, capital values were slowly declining. This drop in values combined with the rising rents led to increased yields
for Bidwells throughout Q3, with the average prime yield reaching an historic high of 4.64%. We have witnessed a marked difference in the amount of high-quality HMOs available in the area
76 JANUARY 2024 CAMBSEDITION.CO.UK
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