Rapid Evidence Assessment of the Research ... - Rural Housing

Rapid Evidence Assessment of the Research Literature on the Purchase and Use of Second Homes
Property profile, price increase and affordability: evidence from national studies
77. Gilbert (2001) claimed that: compared with the 1980s more recent purchases of second homes involved
“properties that rival or even surpass that of the main residence” and “Many property hotspots are where
potential second home buyers compete head on with local buyers often as cash purchasers and bid the price
of local property up. Many of these hotspots are desirable locations with second home-owners now significant
minorities” (p18).
78. The 2005 Direct Line study, using FPD Savills data, identified average prices for second homes and
confirmed their changing profile:
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“The average price paid for a second home in 2004 was £415,000 – this was more than the £380,000
average spent on the [sic] main residence. The average price paid for a second home in 2000 was
£327,000” (Direct Line, 2005, p4).
79. This analysis implied that second homes are increasingly located at the higher value end of the market,
although the question of the extent to which the purchase of higher value homes has a ‘cascade’ effect on the
price of lower value homes is not pursued.
Property profile, price increase and affordability: evidence from local studies
80. The evidence available from local studies has tended to focus on the extent to which external demand,
derived from retirement and commuting patterns, and including second home purchase, has pushed property
prices beyond the reach of local residents, for example, Gallent et al (2002) in relation to the Lake District and
Tewdwr-Jones et al (2002) in relation to Wales.
81. There is an almost total lack of robust evidence to support the contention that second homes increase
property prices. Fitz Gerald et al (2003) estimated for Ireland that second or vacant dwellings added between
15 and 20 per cent to property prices during 2000 to 2003, with price increases much higher in the Border,
Midlands and Western Region due to the concentration of the growth in such dwellings there.
82. However, an attempt by the Council of Mortgage Lenders to use Land Registry data to identify price
changes in Welsh local authority areas with concentrations of second homes (Tewdwr-Jones, 2002) produced
the surprising finding that “house price rises are slower today in those areas that have experienced second
home growth over the past 10 years” (Gallent et al, 2005, p46). As Gallent et al point out, the correlation
established was very weak but even if valid, it might simply indicate that property prices remain lower than
average in rural areas.
83. Attempts to isolate the separate, and especially the local impact of second homes within the overall
dynamic of ‘external demand’ have proved elusive, and only a few studies have profiled second homes in detail
and then assessed their potential impact on prices, affordability and access. The report undertaken by Suffolk
County Council in 2004 identified, from a study of the Council Tax bands, that,
“second homes tend to be in the lower bands, and thus the same types of properties as those sought by
first-time buyers, or those seeking affordable housing” (Suffolk County Council, 2004, p13).
84. However, the supporting evidence provided a more complex and highly localised picture with second
homes in Waveney concentrated in the lower Council Tax bands but a wider distribution in both Suffolk Coastal
and Babergh.