A Glimmer of Hope - Second Home Market on the Island

1/9/10

The housing market across the UK generally is reported to be in a state of flux. There are more properties coming onto the market, fewer buyers, lowering of prices and the warning of a double dip.

There is one area which appears to be going quite well – this is the second home or holiday let market.

A report released recently by Knight Frank, who we work with, shows that the number of second homes rose in value in 2009 by 2.6%, despite the credit crunch, to reach a record level of 245,384. They see this increasing to a level of 250,000.

Economists are predicting that money spent by British holidaymakers in the UK will grow by 2.6% in 2010 because of the exposure in the Euro Zone.

Increased yields are improving in the holiday market, up to 7% for good quality accommodation, which is seen to be all the year round. This was ratified by our recent workshop on the future of leisure and tourism on the Isle of Wight, where occupancy rates and good quality accommodation was seen as high as 80%, and for lower grade accommodation 35%-45%.

Buyers who are now looking are looking at their purchases as investments rather than a luxury item. Many second homes have in the past have proved they are able to wash their face. Now there are indications that they are giving a return.

The Island is perfectly placed to take advantage of this growing market. Mr Cameron’s recent comments on increasing tourism and revenues across the UK has given some vision and lead. Tax advantages on serious holiday lettings are helping. Future policy indicates that serious investors are going to reap the benefits.

Our experience of this in our sales department is that most of our enquiries are for holiday homes across the coastal and country areas.

In our development and planning consultancy departments we see schemes coming forward which enhance the second home market by being different and providing an up market property which will provide and satisfy all year round demand. These are seen as projects such as Priory Bay Hotel Estate, Harcourt Sands, Ryde, and the Woodside Bay Wootton Estate. These schemes will provide over 400 units over the next 5 years. These are not paper planning permissions, but schemes that have been built out by serious operators or investors, hence there appears to be a confidence in the product moving forward here on the Island, and what the Island has to offer.