Over the past three years London has accounted for some of the most pronounced changes in recorded second home ownership. In the City of London, where almost a quarter of all residences are registered as second homes, the count fell by 4.4%, and in Kensington & Chelsea, where 8% of homes are second homes, numbers fell by 4.3%.
In Westminster, 6.5% of properties are registered as second homes.
"There is clearly a significant difference between the working week pied à terre in central London and the classic weekend retreat or holiday home, but both qualify for a second home designation," said Lucian Cook, director of residential research at international real estate adviser, Savills.
"We are certain that falls in registered second home ownership in central London locations are not wholly attributable to redundancy or financial concerns as we have not seen an associated rise in property for sale. Rather, we believe that the reasons are more prosaic. For example, owners need a permanent to secure a parking permit, which may well have triggered them to forego the benefits of a second home registration and re-register their property for full council tax."
More modest, but nonetheless significant falls in second home ownership have been seen in areas such as the South Hams and North Norfolk, down -5.9% and -3.4% respectively. Growth has slowed to a near standstill in some of the recognised holiday home hotspots, for example the South West of England and East Anglia, where numbers are up by just 0.7%.
There has been a sharp price correction in some of the traditional second home markets, particularly where City money had fuelled a real price boom. For example, prices in Devon and Cornwall have fallen -24% and -21% respectively since the peak of summer 2007. Smaller falls of -18.6% have been seen in the Cotswolds, and Suffolk, Norfolk and Dorset, each down around -15%. In brief, locations which are within striking distance of London, and which more readily provide weekend as opposed to pure holiday accommodation, have fallen less sharply.
"These areas are better underpinned by people choosing to relocate (often to commute into London), retirement and local demand," said Cook.
"As a result, they saw less of a bubble than other second home destinations and are consequently not falling as sharply.
"It’s rather too early to tell if debt will play a role in second home ownership. Anecdotally, we know that families become very attached to their second homes and will only sell as a last resort. However, in resorts such as Salcombe and Rock, which had seen exponential price growth, the market is very quiet. In these resorts, where four out of ten properties are second homes, we expect turnover and prices to remain suppressed for some time to come."
Further analysis shows a pronounced "best versus the rest" dynamic in the second homes market. Savills Research has ranked second homes by location and character, an analysis that reveals a sharp division between the best and the worst, with the upper quartile falling just short of -12% since peak (six points short of the average falls), while the bottom quartile, defined by their secondary location or less attractive build, have fallen in excess of -25%.
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