UK ‘miracle region’ avoids crunch

The credit crunch may be taking hold, but one region of the UK is seemingly immune…

According to Knight Frank, the South West is still expected to outperform the UK average, with only a moderate correction in prices expected through the year (-1% compared to -3% for the UK as a whole), despite weaker market conditions across the board in early 2008.

The South West has nearly a quarter of all of England’s second home stock (24%) 26% of all public sector relocations have moved to the western region. The South West achieved house price growth of 11% (England and Wales, 9%) in the year 2006 – 2007

Liam Bailey, Head of Residential Research, Knight Frank comments: “The region is also benefiting from an enlightened series of development programmes that has seen a focus placed on the regeneration of city and town centres and the reuse of abandoned public sector land. One particular trend worth noting is the way in which retail and residential projects are being delivered in tandem through large mixed-use developments.

“Another is the manner in which regeneration is being used as a mechanism to promote the unique selling points of various towns in the region such as Newquay, Padstow, St Ives and Falmouth. We therefore expect the region to fare better than other UK regions, some of which are constrained by narrower purchaser profiles and a greater risk of oversupply.

Large scale regeneration

Mr Bailey continued: “The flow of investment capital from London into Bristol and Bath has been responsible for a large proportion of new development in the past decade.

“The concern now is that the cities’ strong links with London do not overexpose them to the recent financial market volatility. This should be mitigated to an extent by the large scale regeneration at South Bristol and Bath Western Riverside which ought to help attract further capital – both private and public.

“In 2007 the western region experienced house price inflation of 3%. The economy of the west remains intrinsically linked to tourism as well as levels of inward investment. In this respect economic growth in the region will be assisted by the next round of EU Structural Funds (2007 – 2013) in which parts of South Wales and Cornwall have been named as key Convergence Regions.”