August 9, 2013 5:34 pm

Cambridge closes the gap on Oxford over property prices

Both cities have historic pedigree, quality housing and good schools but one has traditionally enjoyed higher prices
Illustration portraying Oxford and Cambridge©Tim Marrs

Crews from Oxford and Cambridge have tussled for dominance on the river Thames since 1829. Currently it is Cambridge which can boast a sliver of clear blue water, with 81 Boat Race wins to 78.

On land the rivalry between the two cities is more complex, particularly when it comes to real estate. On the face of it, Oxford and Cambridge are similar. Both city centres overflow with fine historic buildings (and one or two modern mishaps), interspersed with shops, bars, restaurants and cafés. These historic cores are encircled by verdant suburbs of mainly Victorian and Edwardian homes and high-achieving schools. “Both tick the boxes in terms of commutability, schools and quality of housing stock and the wider built environment,” says Lucian Cook, director of residential research at Savills.

Nonetheless Oxford has historically enjoyed higher prices and stronger growth: an average home in the city today is worth £373,021, some 14 per cent higher than in Cambridge, and mainstream prices in Oxford are up 20 per cent since the peak of the market in 2007 compared to 8.7 per cent in Cambridge.

Cook believes this difference is down to geographical location. Oxford may be only marginally closer to London than its rival but it is (crucially) adjacent to the affluent Cotswolds region and just under 50 miles from Heathrow airport.

However Oxford does not have things all its own way. For a start, Cook says, prices in the city’s most expensive areas – wards like Oxford North and St Margaret’s, both north of the city centre – have rebounded to roughly their 2007 levels. In Cambridge, however, prices in prime wards such as Newnham and Queen Edith’s (to the west and south respectively) now exceed 2007 levels by up to 11 per cent. This, he suggests, is probably because the Cambridge wards were comparatively undervalued when the crash happened.

Also worth noting is the disparity between the performance of houses and flats in the two cities. Houses in Oxford are clearly the more expensive and growing the fastest. An average property currently costs £741,606, up 88 per cent in the last decade, while in Cambridge a similar property is worth £606,000, up 74 per cent.

When it comes to flats, however, the light blues have been staging a fight back, with a spate of high-end developments attracting alumni, proud parents and investors. Flats in Oxford are currently still more expensive, at an average of £246,284 compared to £228,394. This represents a 10 year price rise of 48 per cent in Oxford, and 60 per cent in Cambridge.

Cambridge’s swifter price growth is thanks to a series of prime new-build projects like the £850m mixed-use CB1 development currently taking shape beside Cambridge Station, which includes new offices for Microsoft. The first 169 private homes on the site are being built by Hill Residential (www.ceres-cb1.com).

Since last August, 87 apartments have been put on the market and almost 90 per cent have sold. Buyers, who have been a mix of local professionals and individuals from Hong Kong, Singapore, China, Vietnam, Lebanon, Saudi Arabia and Italy, have paid from £209,950 for a studio to up to £575,000 for a two bedroom flat at the development.

Another example of the interest in high end new-build in the city is Cambridge Riverside: 195 flats and 10 houses beside the River Cam, to the northeast of the city centre. The Berkeley Homes scheme launched in November 2011 and today only 12 units remain unsold, including two-bedroom duplex apartments (1,285 sq ft) priced at £799,950 and three-bedroom duplexes (1,529 sq ft) priced at £899,950 (www.cambridgeriverside.co.uk).

Toby Greenhow, head of residential development at Savills in Cambridge, says schemes like these have been made possible because Cambridge City Council has a policy of promoting city centre house building, in the face of a major housing shortage. The majority of buyers – Greenhow suggests 70 per cent – are classified as investors. This includes parents buying flats for their student offspring as well as more traditional buy to let investors, many of whom are University of Cambridge alumni.

“Buyers from south east Asia in particular see the benefits because of the weak pound,” says Greenhow. “There is also security, and a flat is a good place for them to stay when they visit, plus the quality of accommodation is probably better than [their children] would get if they rented.”

There is a notable lack of premium new build in Oxford, however, partly because of a lack of building sites and partly because the local council is not as keen on development in the city’s historic heartland. Gavin West, director of Kemp & Kemp, says that this is why Oxford’s build market is strangulated – but that the second-hand market more than makes up for it.

West likens the city to London, with prime central areas booming thanks to interest from overseas investors. And the reason for the influx of overseas buyers, particularly from Russia and China, is simple: education. “The Dragon School has a reputation for helping build a fantastic contacts book, but it is Magdalen College School (boys; with a coeducational sixth form) and Oxford High School (girls) which are the real drivers,” he says. St Edward’s school is also popular, with some parents buying houses nearby, even when their children are boarders.

West estimates that 70 per cent of homes sold within a mile of The Dragon and St Edward’s, in central and north Oxford respectively, are bought by overseas parents keen to have a base near their children in a safer, quieter and comparatively more rural environment than London.

Architecture around the two schools ranges from Italianate town houses and detached houses by the architect Samuel Lipscomb Seckham in Park Town, to substantial Victorian villas and semi-detached homes on Bardwell Road. There are high Victorian houses on Norham Gardens and Arts and Crafts detached houses on Bellbroughton Road. These sought-after homes sell for an average of £2m to £2.5m, but can cost well in excess of £4m at the top end.

For those not afraid of a renovation project, John D Wood is currently selling a 4,800 sq foot gothic house close to Oxford High, until recently used as student accommodation but with planning consent to be converted into a family house, for £4.25m (www.johndwood.co.uk).

Closer to the city centre, Jericho, with its bars, boutiques and independent cinema, is the most fashionable address in Oxford. Residents include Slumdog Millionaire scriptwriter Simon Beaufoy, and Mark Haddon, author of The Curious Incident of the Dog in the Night-Time . Its painted artisan cottages sell for around £400,000.

Back in Cambridge, David Radcliffe, a director of Radcliffe and Rust estate agents, is keen to point out that modern apartments are not the city’s only property option. Thanks to local employers like Addenbrooke’s Hospital and the university, plus numerous science and technology companies in “Silicon Fen”, quality family housing is also in strong demand, which is pushing up prices.

Cambridge’s answer to The Dragon is the Perse School, which is based on three sites in the southeast of the city. This, says Radcliffe, means the Victorian homes in the suburb of Trumpington, are particularly sought after. Strutt & Parker (www.struttandparker.com) has a six bedroom Victorian house, The Old Mill, which has been recently refurbished to include a cinema room and half an acre of gardens and within walking distance of The Perse, on the market for £2.5m.

However Radcliffe’s personal preference is for homes in the Victoria Park conservation area in the city centre, where four to five bedroom Victorian houses sell for above £1m.

Meanwhile, the unremarkable Chesterton in north east Cambridge is seeing an investor scramble thanks to the arrival of a new station in 2015. Two bedroom Victorian terraces are selling for close to £300,000 in anticipation of the improved transport links.

Ed Meyer, head of residential at Savills in Cambridge, feels the city’s strong record of attracting top level science and technology companies (he cites imminent arrival of pharmaceutical company AstraZeneca with some 2,000 staff) means it has the potential to close the gap with its collegiate rival.

“Every house sold this year thus far in the Cambridge city market has sold at or above the guide price,” he says. “Half our sales have sold in competition either in sealed bids or during open rounds of negotiation – the biggest offer above guide being 22 per cent.”

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Next week: Harvard v Yale

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Letter in response to this article:

Rising house prices are not a ‘jolly race’ / From Mr Henry Brougham

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