What is happening to the Norfolk and Suffolk housing market?

A shaky economy, house price growth slowing and rising interest rates – all signs are pointing to a downturn in the housing market.

Fears that this could be exacerbated by a drop off in first-time buyers after the Help to Buy scheme ended last autumn has prompted property developers to call on the government to revive the initiative.

Locally, housebuilders have said that although sales remain “strong”, some form of help for first-time buyers is going to be “necessary” to keep the market moving.

Paul LeGrice, from Abel Homes which is building developments across Norfolk, said: “Encouragingly, we have not seen the ‘cliff-edge’ downturn in first-time buyers that some predicted with the end of Help to Buy – sales to first-time buyers have remained strong. 

Paul LeGrice from Abel Homes (Image: Newman Associates PR)

“But as interest rates rise and the cost-of-living crisis continues to hit, affordability is going to become an issue, especially for those without help from the ‘bank of mum and dad’.

“Some form of government support for first-time buyers is probably going to be necessary, although this may not be an exact replica of the Help to Buy scheme. 

“For example, we may see a strengthening of the support for shared ownership schemes, which are increasingly playing a part in helping those taking the first steps onto the housing ladder.”

Meanwhile, Hopkins Homes, which has developments across East Anglia, has signed up to a national scheme to help first-time buyers onto the property ladder.

“With Help to Buy coming to a close, we needed to offer a new option that would help people buy a new home,” said Monika Hanlon from the building developer.

“So we’re thrilled to have signed up to the Own New scheme and look forward to its imminent launch.

“Own New will help first-time buyers afford a new home with Hopkins Homes without relying on support from the government.

“The Own New scheme is a simpler way for buyers to get a mortgage on a new build property at up to 95pc of the purchase price and is open to everyone, not just first-time buyers.”

Slowing housing market

An unexpected outcome of the pandemic was a booming housing market.

Research from Yorkshire Building Society estimates that the number of first-time buyer transactions in 2021 was 408,300 – its highest level since 2002.

The pandemic saw an increase in house prices (Image: Newsquest)

The scrapping of the stamp duty during this time also saw a significant rise in home movers, as property owners looked to take advantage of lower tax rates, which pushed up house prices.

Last year, however, saw a sharp slowing of the market as homeowners and first-time buyers became cautious due to fears of a recession and rising mortgage rates.

The Nationwide House Price Index December 2022 report found that across the country the annual house price growth fell to 2.8pc.

Despite the market in East Anglia also slowing, it found that it was the strongest region in 2022.

Mr LeGrice has also found that the Norfolk market has remained strong.

He said: “In general terms, despite the economic pressures, we are finding the market in Norfolk is holding up well. 

“We would say that we are seeing a return to more normal market conditions, and thus a more sustainable position. 

“There is still plenty of demand for new homes. 

“The same can be said of house prices. The market is normalising after a period during which there has been an acceleration in prices. 

“I don’t believe we will see significant price falls in Norfolk, as there is still a mismatch between supply and demand – albeit not as pronounced as has been the case in recent years.”

Lee Barnard, group managing director of Hopkins Homes, has also found that despite increasing mortgage rates and the cost-of-living crisis, its sales rates “are holding strong”.

Lee Barnard, group managing director of Hopkins Homes (Image: Hopkins Homes)

He added: “The introduction of a seasonal sales incentive helped enquires return to the summer highs, further aided by the launch of our new development, Wickham Gate in Wickham Market, Suffolk.

“More than 40 visitors attended the sales launch weekend in mid-January.”

Nutrient neutrality

Some housing developments have also been affected by a ban on building work due to concerns about the amount of nutrients entering waterways – an issue known as nutrient neutrality.

In Norwich alone, a total of 52 development sites have been held up in the planning process due to this, which equates to 1,623 new homes.

Some housing development have been put on hold due to nutrient neutrality (Image: Newsquest)

“The nutrient neutrality situation has inevitably had an effect on the supply of new homes over the past year,” said Mr LeGrice.

“As we move into 2023, we are cautiously optimistic that progress is being made towards a workable solution which will enable the new homes, which Norfolk needs, to be built.”

The issue has also affected Hopkins Homes.

Mr Barnard said: “The planning system continues to present many challenges that hinder the speed at which new homes can be built.

“Nutrient neutrality considerations create significant challenges in our region, and despite local plans being in place, the planning process continues to pit housebuilders against local communities.

“To make sure new homes continue to be created where they are most needed, this needs to be simplified.”

While the housing market is facing a tough time, local developers are clearly optimistic that the region will not suffer a housing crash and are putting incentives in place to help first-time buyers onto the property ladder to keep the market moving.