And the report reveals that Cambridge is at the forefront of the housing market recovery, with rapid growth in prices rising by more than 30% since 2007.
The City saw house prices increase by more than 10% between 2013 and 2014, twice the national average of 5.1%.
David Bentley, Head of New Homes, said: "With the benefit of a strong economy, high demand and limited housing supply, house prices in Cambridge have risen more than in any other British town or city over the past seven years.
"Following many years of under supply, new developments around the city will see a dramatic increase in new housing provision over the next five years. This should temper price growth to more sustainable levels.
"But medium house prices in Cambridge are now at ten times higher than the level of medium earners. Across England the ratio is just seven times higher."
He concluded: "The local housing market has been fuelled by the success of the Cambridge economy and employment prospects in the hi-tech, bio-tech and medical industries, coupled with the University of Cambridge and other education establishments. The City is also favoured by foreign investors and commuters to London."
The ensuing growth of Cambridge since the mid-1990s has exceeded all expectations in terms of housing, population employment and business investment, the report reveals.
This has in turn created an urgent need to provide new infrastructure and integrated governance to support future growth and investment across administrative boundaries.
The report also discusses housing delivery in Cambridge and the City-Deal which will see £500m invested over the next decade. And it looks at the Northstowe Development at Cambridge which has been chosen as the test bed for a new government initiative designed to speed the delivery of housing.
Regionally the report considers recent trends, how the cycle is evolving and what will be the key factors which shape the sector in 2015.
Help to Buy, Stamp Duty reforms, planning policy revisions and revised mortgage procedures have all had a marked impact on the market.
Despite the forth-coming May Election and the temporary diversion this will inevitably provide, the UK economy appears robust and positive from a housing market perspective.
The data reveals that price escalation, mortgage lending, planning approvals and housing did dip in the last quarter of 2014, following a frenetic mid-year period.
Pricing elasticity and a more exacting mortgage market, albeit with record low borrowing rate started to emerge and the market steadied. This suggests a more measured market growth for 2015 which is likely to bring single digit price increases in most markets. Bidwells predicts a 5% average house price growth in the Eastern region this year.
With house price growth easing and mortgage volumes stabilising, market conditions in 2015 are likely to be more sustainable throughout the Bidwells region. This in turn will create a more stable decision-making environment for buyers, sellers, developers and funders alike.
The context for new development will remain encouraging and the report examines the current housing pipeline and its anticipated direction and impact.
Key findings in the report:
- Above trend economic growth over the next three-four years will support high levels of activity in the housing sector – this will be underscored by a moderate price appreciation in most markets
- The forthcoming General Election will probably slow activity in the middle of the year, but the positive dynamics underpinning the sector are unlikely to alter significantly
- Nationwide house prices for Cambridgeshire in Q4 of 2014 was £264,022
- Nationwide average house price in Cambridge is £423,904
- Current forecasts suggest that, within Cambridge City and the surrounding districts of South Cambs, demographic growth and household formation rates will combine to produce net demand for 35,000 additional dwelling in the 20 years to 2031
- The forecast of household projections within Cambridge to 2031 is some 63,350, representing a remarkable 28.4% increase from the 2000 levels
- Most markets remain structurally under-supplied – but further increases in development volumes are anticipated
- The 2015 forecast for UK GDP is 2.4%
- Price levels have exceeded an average of £465 per square foot in 11 of the 32 London boroughs
- House price growth for the Eastern region over the five years to the end of 2014 was 23%
- DCLG data shows 112,370 housing completions in the year June 2014 in England; this represents only a 4.1% increase on 2012/13 and is less than half of the estimated annual house requirement of around 240,000 new homes.
- House Price Index – the second half of the year saw price growth begin to slow – over a year as a whole prices grew by 8.3% in the Bidwells region (with two thirds of the increase in the first six months of the year)
- In the region new homes prices have risen by 10.6% over 2014 compared to increases in the country house sector, where prices are up by 6%
- In Cambridgeshire, in the final months of the year, market values in the large country house and townhouse market were down 1.5% - reflecting the recent Stamp Duty changes
- The regional house price average for homes in Norfolk was up by 4.9%
- In Hertfordshire the average house price was up 7.9%
- In Cambridgeshire it was 9.8%
The Residential Commentary can be viewed at www.bidwells.co.uk/eresearch/residential-commentary-spring-2015/
About Bidwells
Established 175 years ago, today Bidwells is one of the UK's leading property consultancies. We employ almost 500 people in 13 offices across England and Scotland and provide a full range of services across the Commercial, Residential and Rural sectors.
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