Peterborough is growing, but needs new residential and commercial stock to meet demand, says Ben Rudd at Savills.
Strong economic and population growth in Peterborough will produce new opportunities in the city’s residential sector, as revealed in our latest research, but new stock is needed to meet growing demand across all sectors.
Our latest research report, titled Peterborough: A growing city, highlights that whilst the city is proactively responding to strong residential demand through ambitious targets and a healthy land supply, high levels of development are still required to meet housing need.
House price growth in neighbouring markets and the wider county have shown signs of slowing in recent years, but Peterborough still has room to grow. The city itself has the most diverse residential market, with lower value areas to the east contrasting pockets of high value areas towards the centre. Eastfield, to the east of the city, recorded an average transaction value of £115,000 in the year to May 2018 whereas Longthorpe, on the western edge, recorded figures almost three times higher over the same period. Further afield in more rural areas, values are even higher, at £440,000 around Castor.
House prices in Peterborough have recovered more slowly since the Global Financial Crisis than in the rest of Cambridgeshire. Peterborough house prices are now 13% above their peak levels recorded before the economic downturn, compared to over 30% in Cambridgeshire and almost 40% in the wider East of England region. However, since the end of 2016, value growth in Cambridgeshire and the East of England has slowed as housing affordability has become increasingly stretched. Conversely, Peterborough has seen strong price growth over the same period. Values increased by 7.4% in the year to May 2018 as buyers are not yet facing the same affordability challenges.
More homes needed
To meet housing need, the area needs to deliver high levels of housing development. Both the adopted and emerging local plan targets for Peterborough are well in excess of 1,200 homes each year. Meeting this target will require housebuilding at a level equivalent to 1.5% of existing stock per annum.
To meet this challenge, Peterborough is currently able to demonstrate a housing land pipeline equivalent to over six years of supply.The largest share of supply will be coming through on city fringe areas, with plans to build upon the success of The Hamptons. 750 homes will be delivered at Hampton over the next five years, and consent has been granted for a 5,300 home scheme at Great Haddon. In the longer term, proposals include a 2,500 home new settlement at the former Peterborough aerodrome.