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Bath property market survey April 2009

publication date: May 5, 2009
 | 
author/source: Lisa Crosby, Propertydrum
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BATH: 
A BATHING BEAUTY
Bath is one of the most beautiful cities in the UK, standing on the River Avon and surrounded by the spectacular open spaces of the Cotswolds and the Mendips. The city’s compactness and striking architecture – Roman baths and sweeping Georgian terraces – combine to produce one of the most elegant sights in the UK. The ancient Celts, who first inhabited this area, believed that Bath’s hot springs were sacred, but it was the Romans who built their temple and the famous baths in 75 AD – now restored to their original grandeur – and the Thermae Spa was opened in 2003.

Bath’s heyday came in the 18th Century when it became a glamorous spa town; a showplace for Georgian high society. The city became England’s most fashionable resort, where society came to take the waters in the Pump Room (which were said to cure a whole variety of diseases), to dance and flirt at the Assembly Rooms, to gossip, to gamble and promenade. Much of the architecture of Bath dates from this time, and the city is famous for its elegant Georgian townhouses, sweeping and panoramic crescents, honey-coloured limestone terraces and 70 or so Grade I listed buildings. It’s a fascinating place to be in the property business.


SUMMARY OF PROPERTIES FOR SALE IN BATH AS AT 14TH APRIL

Total properties for sale in Bath: 938
Properties for sale in Bath listed in the last
14 days: 47
Average price of properties for sale in Bath: £341,399
Median price: £259,950
Average Time on Market (ToM): 174 days

WORLD HERITAGE CITY
Bath is now a UNESCO World Heritage Site and a popular UK tourist destination famous for its hot spring aquifer fed Roman baths (the only natural waters in the country), its wealth of 18th Century Georgian architecture, its 15th Century Abbey, The Circus (home to many famous people including Gainsborough and Lord Clive of India), The Royal Crescent (a striking crescent of classically-joined Georgian town houses) and Pulteney Bridge. The city has a number interesting art galleries and museums devoted to subjects ranging from the town’s Roman past to the history of costume and the Jane Austen Centre.

Home to 85,500 people and with an estimated 3.8 million day trippers per year, tourism is a major industry in Bath. Other key industries include a large service sector and buoyant information and communication technology industries. Education is also a key area of employment with two universities and a number of good schools and colleges.

SHOPPING AND EATING
Bath has an excellent range of shopping facilities – from established chains and department stores to a wide array of interesting top class specialty shops and boutiques. On the outskirts of Bristol (approx. 10 miles) is the giant Cribbs Causeway Shopping complex.

Georgian Milsom Street runs north to south through the centre with intriguing shopping streets leading to Shires Yard, an elegant courtyard of quirky retailers. When the annual Christmas market comes to town it transforms the city’s main square into a charming festive marketplace. There is a great range of restaurants, cafés, pubs and bars in Bath, from sophisticated dining at a Michelin star award-winning restaurant, afternoon tea at the beautiful Pump Rooms or a leisurely lunch in a bistro café or pub.

ACCESSIBILITY
Bath and the surrounding area are easily accessible, having excellent road and rail links. It is 15 miles from Bristol via the A4; it is a similar distance from the M4. Bath Spa station has regular trains to Paddington (90 minutes), Bristol Temple Meads (15 minutes). The River Avon links Bath to Bristol and is popular with narrow boats. There are also regular coach and bus services between Bath and Bristol, London and other outlying areas. The nearest airport to Bath is Bristol International, 21 miles away.

Bath is easy to get around – it only takes 15 minutes to walk from one end to the other. However, parking is at a premium, so visitors take advantage of the ‘park and ride’ facilities as an alternative to driving into the city centre and there is a good network of cycle paths.

LIFESTYLE
Because Bath offers a combination of beautiful Georgian architecture, glorious countryside, an impressive collection of shops, superb restaurants, highly-rated schools and efficient transport links it makes it an idyllic choice for any homebuyer. Within easy reach are the Cotswolds to the north, the Mendips to the southwest and, just across the Severn Bridge, Wye Valley and the Forest of Dean.

DOWNSIDE – TOURISTS AND TRAFFIC
With its beautiful spas, historical connections and safe and pleasant streets, living in Bath is very agreeable but it does come at a price. At least half the borough’s population lives in the city. Add the hordes of tourists and it can become very busy indeed. The newly-refurbished Thermae Bath Spa has brought what locals say they need less of: more visitors and more traffic.

Bath is one of the most expensive parts of the southwest, particularly the Georgian core of the city, where the most prestigious properties change hands for £1 million plus. Home ownership in Bath is slightly lower than the national average, which is possibly driven by the higher average cost of houses for sale in Bath with an average price to earnings ratio of 10:1.

Also, many of Bath’s prized period residential buildings could also benefit from refurbishment. “The reality is that behind the attractive Georgian facades, many properties are in poor condition,” says estate agents Bradford & Bingley. “These properties usually don’t come to the open market. They are sold in private deals, usually to developers.”

A recent survey carried out by Property Southwest magazine suggested that people living in the southwest have mostly moved there for lifestyle and that 63 per cent of people – the highest proportion across the UK – plan on staying where they are. Whilst the credit crunch is biting hard in the rest of the country, in the southwest the property market seems to be fairing better. The southwest’s retirement sector is traditionally strong as it offers so much to those with time and money to spare. The retirement market accounts for a major part of the housing industry, it is stable because most of its buyers are downsizing from elsewhere, so bring plenty of equity from their old home and keeping the market buoyed up, whilst the mid- to low-end of the market is in the doldrums.

WHAT DOES IT COST?
Bath is famous for its beautiful rows of Georgian crescents. Last year it was reported that an entire row of Grade I listed Georgian houses (previously owned by Bath Spa University) sold for a reputed £10 million after being on the market for almost a year. The developers plan to restore and convert the houses into luxury town houses and flats. The finished homes could command up to £2 million each.

It is one of the more affluent cities in the southwest, which is reflected in the house prices significantly exceeding the national average. Property for sale in Bath isn’t just limited to Georgian properties, there is a good selection of houses for sale ranging from £200k+ upwards – modern detached family houses, Victorian terraced houses, mews style properties, cottages and bungalows. There is also a good selection of flats for sale in Bath, flats above commercial properties, apartments in Georgian houses and purpose-built blocks.

Despite the huge fall in property prices in 2008 – the southwest overall saw one of the biggest fall in property prices in 2008 – 15.6 per cent according to some reports, property prices in Bath have risen by an average of 16 per cent per annum over the past five years. The average price of a property in the city is currently £341,399. Residential sales agents report average sale time of 8 - 12 weeks and that HIPs seem to have had little effect on transaction time. The number of viewings per sale has fallen to between five and 10 per property compared with previous year’s averages of between 10 and 15. Buyers and sellers appear to be much more focused.

Flats start at £200,000, although a studio in the Royal Crescent can cost £350,000. Two-bed terraces range from £125,000 in the suburbs to £350,000 in the city centre. City centre garages can sell for between £25,000 and £50,000. There is a shortage of family homes in the £350,000-£750,000 bracket and first-time buyers have traditionally had leaner pickings than in Bristol. However, most agents agree that the market as a whole is buoyant.

THE RESIDENTIAL MARKET
Jonathan Burnand, Residential Sales Director of Wild & Lye Estate Agents in Bath, says that the number of potential buyers registering with them since January has increased but the number of sellers has decreased by about half. He believes that the age old rule of ‘supply and demand’ has a large part to play in the next year or two in Bath. “Supply of new property coming to the market will probably continue to be limited due to the cost of moving”, he says. “Loft conversions, extensions and excavations will enable people to stay in their current homes unless they have to move. Good quality family homes with large gardens and nearby good schools continue to sell well and buyers are having to compete on price for the best ones”.

Many potential buyers have been renting and now perceive this as a good time to buy. Conversely, potential sellers do not think this is a property market where good sale prices are being achieved. Jonathan thinks this is probably because of the one-sided and negative media coverage the property market receives. “Sellers of desirable property would actually be pleasantly surprised at the level of interest they would generate if they decided to move”, he adds.

Jonathan feels that asking prices have to be seen as reasonable by potential buyers who now have access to plenty of sale price information via the internet. From Wild & Lye’s experience buyers are generally offering between two per cent and five per cent below a ‘sensible’ asking price. Many of the houses and flats that have been on the market since last year are now selling between five per cent and ten per cent below their former asking prices.

Bath house hunters usually work locally or in Bristol or Swindon. Hamptons estate agents is seeing renewed interest from London buyers: “Many buyers work from home and spend a few days a week in their London office. New stylish bars and restaurants and great shopping mean that ex-Londoners will feel at home. Many London shows also come to Bath and the university acts as a cultural centre.”

High house prices keep many buyers out of the historic city centre as few can afford city-centre apartments. Villages within a ten-mile radius of the city centre are the most popular. “If you live in the centre, you are a short walk from everything, many residents rarely use a car. But prices have risen steeply over the last few years. Villages like Box, quite well known because Peter Gabriel has a studio there, Bradford-on-Avon, Batheaston and Freshford are more affordable. Peasedown St John, a tiny village four miles to the south of Bath, is becoming a little new town but Wellow and Combe Hay are nearby and very popular,” says Primelocation. A three-bedroom detached house in the village of Peasedown St John is on for £129,950 with Allen & Harris.

The villages to the north are also popular with families for whom Bath prices are too high and gardens are too small. Period houses in West Kington, Dyrham and Doynton are constantly sought after; many have doubled in price in the last six years.

‘PROPERTIES TO DIE FOR’
Local residents describe the city as being chic, classy, swamped in history and having ‘properties to die for’. The Royal Crescent and The Circus are the best addresses; Knight Frank has an exquisite Grade II Georgian townhouse on the market in The Circus for £3.25million. Anywhere in the vicinity of Pulteney Bridge and Pulteney Street are also coveted. Just north of the city centre is Lansdown Crescent, with its rather grand terraces of mainly Georgian townhouses. A ground floor and lower ground floor maisonette is on the market for £840,000 through Cobb Farr.

NEW AND PRESTIGIOUS DEVELOPMENTS
Nearly two-thirds of Bath is a conservation area, so the developers have had slim pickings as there are very few sites left to build on. A major new development is being built at Western Riverside but, for the moment, the most attractive ‘new’ developments are Georgian town houses renovated as apartments. The best of the current crop is one on the Circus, where apartments start at £295,000 with Savills and townhouses with Knight Frank are selling for £3.25 million.
In the historic Great Pulteney Street, a Grade I Georgian terraced townhouse on four storeys is on the market at £1.85 million with Savills. Savills has a wide portfolio of properties on its books with prices ranging from £400,000 to some at the spectacular end of the market priced at £10+million.

SPECIMEN HOUSE PRICES

Six bedroom period property with a contemporary twist in sought-after Weston Park : £2.25 million with Pritchard & Partners

• A Grade II listed Georgian house in Batheaston with a garden leading down to the River Avon: £1.55 million with Knight Frank

• Cobb & Farr are offering a Grade II listed townhouse in Brock Street, positioned between the Royal Crescent and The Circus, for £1.1 million.

• At Bailbrook Lane there is a development of five detached family houses. Marketed by Morris & Co and Savills prices start at £1.1 million.

• A conventional five bedroom Georgian townhouse in Sion Place: £885,000 with Crisp Cowley

• Three bedroom detached modern house with garden in Bathwick: £375,000 with Wild & Lye (pictured)

• A top quality Georgian two bedroom apartment in Herschel Place: £235,000 with Wild & Lye (pictured)

RENTAL
Although there is a strong rental market in Bath due to the concentration of universities and colleges, rental averages in Bath slightly lag the national average. However, the letting agents we spoke to all have good predictions for the next couple of years. “We have had a very positive start to 2009,” says Julie Ilic, Director of specialised Bath letting and management company, Property Link Estates. “We have had more properties in to rent but with the sales market being down, this has possibly affected rentals, bringing them down a tad.”

Richard Bright of Aquarius Homes has seen an increase in activity in the rental market and the sales and letting agency has a high demand from tenants although they do have a shortage of properties to let. Like Property Link Estates they report that rents have been kept down because of the constrained sales market.

Jonathan Burnand of Wild & Lye reports that many of the one and two bedroom flats that they have sold in recent years have gone to investment buyers and landlords who will not want to sell unless rental yields fall. He feels that the rental market may reach a ‘tipping point’ quite soon due to over-supply.

The standard of rental property in Bath is generally high. The average rent for a one bedroom flat is around £650 - £700pcm; two bedroom apartment £750 - £950pcm; three to four bedroom houses £900 – £2,000pcm depending on location. Top rentals in Bath can be as much as £4,000 - £5,000pcm. Property Link Estates have listed properties ranging from £2,495pcm for a Georgian Grade II listed three bedroom town house in Bath city centre to a one bedroom apartment for £750pcm in the Lansdown area – London prices!

INVESTMENT
Traditionally Bath doesn’t suffer under recession, so property tends to have good capital growth. However, due to high capital values currently being experienced, rental yields have not been high and some agents report that buy-to-let investors and investment clubs have been somewhat squeezed out over the last year.

However, since property prices in Bath have shown an uplift of between 16 per cent over the past five years, coupled with today’s substantial cuts in interest rates, many agents believe that Bath is a good area to purchase property for investment purposes. However, agents Wild & Lye still consider the first-time buyer to be a rare type of buyer in Bath unless gifted a large deposit by parents or grandparents. They are in competition with the buy-to-let sector of the market which would prefer it if the younger generation remained renters. Jonathan Burnand believes this will change as it becomes more difficult to obtain buy-to-let mortgages and rental yields decrease.

Property Link Estates report that they have landlords currently buying up stock to rent and, so this is a good time for some!

COMMERCIAL

RETAIL AND LEISURE
Mike McElhinney, a Partner in charge of the Bath office of King Sturge LLP focuses on retail and leisure properties within the city. “It is fair to say that the retail sector in Bath and in particular the quality end of the market in the Milsom Street, New Bond Street, Old Bond Street and the Passageways area remains fairly buoyant,” he comments. “The city does not have large numbers of empty units resulting from recent insolvencies that appear on most UK High Streets at the present time – as many of the retailers that have failed found it almost impossible to get into Bath city centre through the excess of demand.

“Incentives for new lettings in good positions remain very modest. We have recently let 22C New Bond Street, a small kiosk unit of 236ft² for a new ten-year term at an initial rent of £25,000 per annum on behalf of Imperial, the tenant is Jo Down’s Glass who relocated from Northumberland Place in Bath and the rent for the first twelve months was reduced to £10,500.

“White Stuff at 7 New Bond Street have recently taken a new ten-year lease from Standard Life, the rent for the first five years is £140,000 per annum and the unit has a ground floor of 1,060ft² with a similar sized basement area.”
Asked whether King Sturge see the market improving in the next two years or will recovery take longer, Mike McElhinney replies, “There is little doubt that in the retail sector, Bath has not suffered in the same way as many comparable sized cities – partly due to the success of the revitalised Spa, and partly due to the increased numbers of tourists generally being drawn to the city. The strength of the pound against the euro and the dollar appears to be encouraging those not travelling to Europe to look for interesting places in the UK and Bath is certainly doing well from that.”
SouthGate Centre, a major redevelopment of approximately 25 per cent of the city centre retail market will be fully open within the next two years at a cost of £360 million and commercial agents in Bath see the improvement to the retail offer that this will bring to the city as likely to result in a substantial boost to the retail market across the board.

OFFICES
John Mulholland, Partner of King Sturge LLP reports that the company has seen an upturn in the level of enquiries for office accommodation in Bath, although the majority of these enquiries tend to be for office suites of less than 5,000sq ft. “There are a small number of larger enquiries in the 10,000 – 20,000sq ft range but these are being progressed on a very cautious basis and larger occupiers are taking a prudent approach in the short term.

“Headline rents remain at £19ft² in respect of Grade A office space. However, lack of supply in terms of prime office space is tending to influence this with agents cautiously predicting that a high quality project close to the city centre could well generate rents in the range £22 to £23ft². For example the Pavillions at Brougham Hayes currently being promoted by Bristol developer Deeley Freed has the potential to offer a landmark headquarters building and should command rentals in this range.”

John Mulholland continues: “In terms of incentives we are finding that landlords are taking a more pragmatic view in terms of rent frees/flexible lease terms.”

King Sturge has recently arranged a 4,800ft² let to Jelf Financial Services. This is a high quality edge of town office park by Kenwright Developments which is virtually fully let following the letting last year to Touchstone Asset Management of approximately 15,000 ft².

INDUSTRIAL
Huw Thomas, Partner in charge of industrial and warehouse properties for King Sturge LLP in Bath, reports that the sector is suffering a lack of supply due to older stock being redeveloped for higher value uses such as offices, residential or, most recently, bespoke student housing blocks. There is also no land allocated for industrial use, so the little quality stock that is in Bath is constantly in demand. Demand exceeds supply at present, preventing some companies from expanding within Bath.
The sector most in demand is “good quality industrial particularly any with a degree of road frontage”, Huw Thomas adds. “Most demand for leasehold as freehold industrial space is very rare.”
Average industrial rents are about £7.70 sq ft for good quality second hand stock, though over £8.00 sq ft has been achieved for small “starter unit” size properties. However, King Sturge report there is no evidence of demand for freehold sales.

AUCTIONS
Since the beginning of 2008, property auction success rates have dropped with prices dipping and buyers being more cautious. However, auctioneers are now beginning to see an increase in the number of properties put up for auction. Breach Wood Ingram, a highly successful residential and commercial property auctioneer in the southwest, has offices in Devizes and Bristol.

Says Stuart Laing, Valuer and Client Manager: “Although we had a good summer last year, virtually hitting the 30 lot per auction mark each month with record crowds of buyers in our auction rooms, there was a noticeable fall in the winter months probably due to the decreased number of lots, the dire financial market and buyers waiting for the market to ‘bottom out’ before committing”.

Now, they report that lots in March were up to 28 and they are expecting May to reach the mid 30s. However, although they believe that the success rates are much the same as last year’s and the number of lots going to auction are still steady, they do add that prices from this year’s auctions will be down on last year’s figures.

Breach Wood Ingram is averaging just over 70 per cent of lots reaching or exceeding their average (just under 75 per cent last year) with three more properties looking to exchange soon.

WHAT BANGS THE GAVEL?
Agricultural lots in the area always do well (pony paddocks etc) and they are often under the £60,000 mark. Residential properties that are in need of work are popular because they attract interest from first time buyers, professional couples, buy-to-let speculators and developers.

Commercial premises are struggling due to so many small businesses going under and a lack of spending on the High Street. The few development sites that are available are not selling because vendors cannot meet the valuations of auctioneers. “The cost of the building is the same but the resale of the finished product has decreased significantly, along with the saleability of the end product, thus the value of the land will have decreased – so vendors will hang onto sites rather than build them out,” says Stuart Laing.

Only about five per cent of lots are repossession sales since many of these properties go to London auctions where they are easy to sell but not necessarily for the best price. A repossession property in Bath would achieve a higher selling price with a Bath or Bristol auctioneer because they would have a captive market and more buyers potentially interested in the property. Breach Wood Ingram recently presented a disused pub in Malvern, guided at £100,000 and it achieved 80 per cent above this due to immense local interest and competition in the room.

A disused telephone repeater station (pictured above left) just outside Bath adjacent to the Duchy of Cornwall land was guided at £40,000 but it went under the hammer at an astonishing £106,000. Clearly, someone has exciting plans for it!

THE FUTURE FOR AUCTIONS?
Breach Wood Ingram anticipate growth in the auction market over the next couple of years. Stuart Laing comments, “Auction as a way of selling is becoming ever more popular; buyers are less frightened of the process due mainly to media coverage (the company is to appear on TV’s Homes Under The Hammer in the next couple of months). We work very closely with many estate agents in the area – not as competition, but as another avenue for their existing vendors to sell their property in an otherwise tough property market. 

"Vendors are no longer seeing auction as selling their property at rock bottom prices – the speed and simplicity of selling at auction is attracting more and more vendors. From instruction to exchange of contracts is approximately 6-7 weeks with Breach Wood Ingram, with completion usually a month later; no renegotiations on exchange day, no chance for buyers to pull out. Once the gavel bangs, the deal’s done!”

Breach Wood Ingram has announced that The Bristol Hotel is its new auction venue with its next auction on Tuesday 19th May.

NB Current house prices in Bath represent the actual asking prices for homes for sale calculated daily from the properties in the Home.co.uk property search.

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