10 years as a city

Since being granted city status in June 2012 as part of the Queen’s Diamond Jubilee celebrations, Chelmsford and its housing market have undergone considerable change. The city’s population has grown, but the number of new homes delivery has lagged. The average house has soared in price, to the tune of 70% more than in 2012, outstripping the national growth of 64%. Earnings have failed to keep up, causing concerns about affordability. Meanwhile, the rented sector has shown sustained growth, and new forms of development such as Build to Rent (BTR) have appeared.

A high demand market

One of the biggest changes has been a sharp increase in the value of homes after a decade of strong price growth. At the end of 2011, the average Chelmsford home cost £252,000. Within five years, that had risen to just under £350,000. By the end of 2021, prices had gone up even further, hitting £428,000 – an overall increase of 70% in just ten years and making property within the city £33,000 more expensive on average than in Essex as a whole.

This growth has also fed through to the development land market, with greenfield land values increasing by 25% in the East of England over the last decade.

At the same time, this remarkable increase in prices has considerably outpaced the growth in residents’ incomes and the wider economy. Between 2012 and 2022, the GVA per capita of Chelmsford grew by about 4%.

Similarly, between September 2012 and 2021, median gross incomes in Chelmsford rose 18%, or a little under £5,000. Over the same period, however, median house prices rose by 70%, or £155,000. The result has been stretched affordability: where in 2012, the price of the average home was eight times greater than the median gross income, by 2021, this figure had risen to just under 12, making Chelmsford the fourth least affordable local authority in Essex.

Growth is likely to slow in the future, as the market becomes increasingly limited by stretched affordability. Savills are forecasting growth in the South East region of 10.4% in the five years to 2026. Beyond this forecast period, capacity for house price rises will be dependent on interest base rates and how much households are able to borrow.

The pattern of growth

One major driver of price growth over the past ten years has been supply of new housing failing to meet demand. Between 2011 and mid-2020, Chelmsford added over 11,000 new residents, an increase of 7%, in line with Essex as a whole. Over the same period, 6,650 new homes were constructed. Overall delivery of homes has been around 4% below average for a local authority in Essex.

At the start of the decade, delivery was significantly below need, averaging just 311 homes per year from 2011 to 2014. But over the past five years, net additional dwellings averaged 985 homes per year, well above the adopted local plan target of 805 homes. Much of this delivery has been driven by three large edge-of-town schemes – Beaulieu, Channels Village and St Luke’s Park in Wickford. These schemes alone make up over half of the new build sales within Chelmsford local authority since 2017, with 970 units sold to date.

But there have been some major urban developments too, such as Watson Heights, a redevelopment of the former Marconi site in the city centre, and London House, near Essex County’s cricket grounds. Overall, the pattern of development has been heavily concentrated in certain locations: just under two-thirds of new build homes sold in the last five years have been within five postcode sectors, with the remainder spread across a further 28 postcode sectors.

The pipeline of new homes in Chelmsford is growing strongly. 3,800 new homes have full consent or are currently under construction, according to data from Glenigan. A further 2,250 units are in earlier stages of the planning process. If even half of those were constructed in the next five years, it would represent roughly a doubling on Chelmsford’s delivery rate since becoming a city.

In the longer term, growth is most likely to be focused around the northern edge of the city, supported by new infrastructure. A new station is set to be built at Beaulieu Park by 2025, providing more frequent links into London, and upgrades to the Great Eastern Mainline are expected to increase rail capacity. Funding has also been received from the Housing Infrastructure Fund to develop the North East Bypass. These improvements are expected to support the development of over 14,000 homes in the Chelmsford to Braintree corridor.

A tenure shift

A consequence of rising unaffordability has been to grow the rental market in the city. According to the 2011 census, 73% of households were owner-occupiers; by 2019 estimates, that had fallen to 71%.

Meanwhile, private renting has steadily risen from 12% to 16% of households (households in social housing has remained steady at 13%). As a result, Chelmsford has attracted investment in the BTR sector.

Two major purpose-built rental developments in the city are already underway. The first is at Chelmer Waterside, as part of a 466 unit scheme backed by major institutional investor Legal & General and developed by Taylor Wimpey. This scheme is already under construction with an expected completion date this summer.

Meanwhile the second, Seven Capital’s Glebe Road scheme, has successfully obtained detailed planning permission and will add a further 197 units to the city’s stock. The unaffordability of for-sale housing is likely to persist. The new build sector will be facing a particular challenge with the end of the Help to Buy (HTB) scheme at the end of 2022. HTB has supported 1,300 sales in Chelmsford, around 20% of all new build transactions. As a consequence, demand for high-quality rental stock, including purpose-built schemes, is likely to grow and will include demand for single-family housing in addition to the flatted schemes that have dominated the BTR sector to date.

In turn, this will increase the attractiveness of the area to institutional investors, looking for consistent yields combined with steady capital growth.

For more information, please contact our Planning and Development team in Chelmsford