Regular readers will know that I am constantly complaining about the lack of 3 & 4 bedroom properties in Sunderland, so the news that a development of 750 houses is being planned in Chapelgarth (SR3) should be seen as Good News!
The Sunderland Echo reported this in the following article this week http://www.sunderlandecho.com/news/business/revealed-plans-for-massive-new-housing-estate-in-sunderland-1-7785432
Siglion, who are also tasked with the long-overdue redevelopment of the Vaux site have submitted plans to Sunderland City Council for a development of 2, 3, 4 and 5 bedroom homes near Doxford Park
But how will this affect the Sunderland property market?
My first question is how affordable will these properties be to the average Sunderland resident?
Sunderland typically has a much lower proportion of owner-occupiers than the national average (59% compared to 65% nationally, which itself is down from a peak of 73% in 2007)
This is despite the fact that Sunderland properties are some of the most affordable in the UK (based on average Full Time salary in Sunderland of £25,012 and and average sold price of £133,862 Sunderland has an affordability ratio of 5.35 compared to 7.26 nationally)
Given 42% of properties currently for sale in Sunderland are priced at under £100k and a further 40% are priced between £100 and £200k it is vital that for this development to attract any buyers the price must reflect what local Sunderland buyers are willing & able to pay
I'd also suggest that these New Build properties are unlikely to appeal to investors unless heavily discounted (typically better returns be achieved elsewhere with older properties) and there may even be restrictions preventing them from being rented out for a certain period - so this also means that initially at least, the 13.5% of Sunderland residents who are private renters are unlikely to benefit from this development at all
Without getting all political, everyone who doesn't really know the way the housing market works assumes that renters are only renting under extreme duress - however this is so often not the case!
Many renters prefer to rent long term due to the flexibility it brings, because they prefer not to tie up their disposable income saving for a deposit or because our broken property market means they can rent where they really want to live or buy where they can afford to live (rarely the same thing)
Should it come to fruition this development will benefit the Sunderland property market by removing a bottleneck caused by a lack of larger (+3 bed) properties, meaning there is likely to be a knock on effect across the whole market as it allows those in a position to move up from 2 bed properties are more likely to be able do so in the future (assuming they want a New Build, but that's a separate discussion point entirely)
How such a significant increase in the supply of properties (granted this is likely to be phased over time) impacts on the price of existing Sunderland properties is an entirely different point altogether...
So without question if this development comes off it must be seen as Good News, not least from a jobs creation point of view, but also because it will have a positive effect on the Sunderland property market - that said it is not likely to be a miracle cure or totally transform the Sunderland property market overnight!
If you'd like to chat about any aspect of the Sunderland property market give me a call on 0191 567 8577 or email firstname.lastname@example.org