The Dorset property market has continued to boom in 2022. The continuing rise of property prices post the pandemic has surprised many who had thought that after the stamp-duty holiday, we’d see the frenzy of the UK property market calm down. With house prices on the rise for the fifth consecutive month in June, here at Coversure Poole – the home of great value home and landlord insurance – we thought we take a look at the coastal property market, and ask what rising prices mean for homeowners, tenants and landlords who live and work by the sea.
Dorset Coastal Properties: Living The Dream
House prices hit a record high in June, with the average asking price, according to Rightmove, now an eye-watering £368,614. But this is just the UK average. For homes by the sea, the price premium is at least another 17% on top of that. With Dorset consistently on the list of most sought-after places to buy property, perhaps it’s no surprise that when looking at the average sold prices of detached properties in Dorset, a homebuyer would need £2,201,667 in Sandbanks and £681,094 in Poole.
A home by the sea is a dream for many and in the aftermath of the recent pandemic became a tangible dream for even more. Home and hybrid working has offered more people wider flexibility with regards to where they live. For some, decent telecommunications is all that’s required, while those still commuting are willing to travel that bit further when not facing the commute five days a week. But there’s more behind the coastal property market boom than the rise of home and hybrid working.
Dorset Coastal Properties: Demand Outstrips Supply
It’s ten months since the stamp duty holiday ended, and many assumed the increase in house prices would also end. But despite three interest rate rises already this year, the housing market’s resilience is surprising many.
But while the growth in prices may be slowing, the Office of Budget Responsibility haven’t forecast house price falls. Indeed, their predictions see house prices climb into 2027. The reason is a fundamental one, lack of supply.
Research by the BBC in 2020 found that there was more than a one million home disparity between available housing stock and homes needed in England. While the UK Government has pledged to build 300,000 new homes by the mid-2020s, the number of new homes built in the UK over the last few years have decreased due to the disruption to supply chains and labour during the pandemic.
Arguably supply in coastal areas is even more of an issue than further inland, as not only is it desirable to permanently live by the sea, it’s popular with visitors and holidaymakers who all need accommodation too.
Dorset Coastal Properties: Staycation Central?
With its award-winning beaches, Dorset has been a popular holiday destination since the early 19th century. That popularity has increased with the rise of staycations. Last summer, we saw that despite travel restrictions lifting, many are sticking with holidaying in the UK, which is still the case in 2022.
A recent survey of Google search trend data revealed that two areas in Dorset were in the top 10 of the most searched coastal regions, with Weymouth in 6th place and Lyme Regis in 9th. This upward trend in demand is one many are keen to expand further, looking to make Dorset a year-round destination.
Dorset Coastal Properties: Offering Higher Returns
With demand rising, we’ve seen increased requests for holiday let insurance as more property owners see opportunities for good returns. Research earlier this year revealed that Dorset ranked as the top-earning region for holiday homes in 2021, with revenue up 50% from 2019. When landlords can earn, on average, 21% more per month with short-term lets and holiday lets, it’s understandable that more are looking to rent to visitors rather than tenants. While higher profits are great news for landlords and holiday home owners, it’s adding to the pressure on the private rented sector. This is manifesting in terms of competitiveness for longer-term rental properties, resulting in higher rents.
However, it’s not only the lure of higher profits that are attracting traditional landlords away from long-term rentals but the uncertainty and possible increases in obligations due to the introduction of new legislation such as the Renters Reform Bill. With uncertainty and financial pressure building on landlords and with high property prices, there’s concern that we’ll see Landlords selling up, further decreasing rental property stock.
Dorset Coastal Properties: What Does The Future Hold?
Dorset ranks as one of the happiest places to live in the UK. With life satisfaction and average salaries holding up well compared to other parts of the UK, it’s no surprise that it’s a popular place to live and work. As the tourism industry is such a major economic contributor to our region’s fortunes, contributing £1.8billion to the local economy, it’s also no wonder local authorities and business owners alike are keen to expand on the staycation demand.
The result is increasing pressure on the supply and prices of Dorset’s coastal properties. The Government has recently restated its pledge to increase the available housing stock by 300,000 within the next few years and has also committed to addressing the lack of affordable housing. A multi-million-pound finance package from the Levelling Up Home Building Fund and HSBC was recently announced. As part of that package, 1,000 new homes are being built, some within Dorset, by a Poole-based housebuilder so the housebuilding plan could be a win-win for Dorset businesses too.
Need Some Property Insurance Help?
Whether you are a landlord, holiday homeowne, resident, or tenant in Dorset, here at Coversure Poole, we’ve experts at hand to help you find the right level of property insurance for your needs. Call us on (01202) 801 782 or email Coversure Poole here.
Sources:
https://www.theguardian.com/business/2022/jun/20/house-prices-in-great-britain-hit-record-high-but-falls-predicted-in-2022
Where are Britain’s current coastal hotspots? | Property Reporter
Sold House Prices – Check UK house prices paid on Rightmove
Housing market – Office for Budget Responsibility (obr.uk)
https://www.bbc.co.uk/news/uk-politics-61400935
https://www.dorsetecho.co.uk/news/20219270.weymouth-sixth-searched-seaside-holiday-destination-uk/
https://www.dorsetecho.co.uk/news/20005730.dorset-top-earning-county-holiday-homes/
https://www.mpamag.com/uk/mortgage-types/buy-to-let/short-lets-can-increase-a-landlords-rental-income-by-21-but/410440
https://www.bbc.co.uk/news/business-61650382
Planned amendments to Renters’ Reform Bill risks’ driving up rents’ – Property Industry Eye
https://www.dorset.live/news/dorset-news/dorset-happiest-place-live-uk-7215992
Dorset Tourism Statistics – Visit Dorset Business Support Hub (visit-dorset.com)
Tackling the under-supply of housing in England – House of Commons Library (parliament.uk)
https://www.gov.uk/government/news/1000-new-homes-to-be-built-through-funding-partnership-with-hsbc
