Can South West locals buy homes?

By Tom Warren
BBC News

The second home market has slowed dramatically, evidence shows

The South West has seen the biggest yearly slump in house prices across England and Wales, according to the Land Registry.

So with second home investors shunning the market, can Devon and Cornwall residents on more modest incomes finally afford to buy?

John McShea is a self-employed shipwright who builds boats in Devon.

The 31-year-old lives near Totnes with his wife and two young children, a 45-minute drive from his workplace in East Portlemouth.

'Love to buy'

But despite having built up a successful business he cannot afford to save a significant deposit and buy a home for his family.

He spends £650 a month renting a property - to buy a similar-sized house in the same area would cost about £300,000, he said.

According to Land Registry figures released this week the South West has seen the biggest property price fall of anywhere in England in Wales over the past year.

In April 2009 the average house price in the region was £159,704, an 18% drop on the previous April.

According to the figures the average home in England and Wales was worth £152,898 in April.

So even after the 18% drop, South West properties are still 4.5% more expensive than the average.

That is no consolation to people such as Mr McShea.

"We would love to have a house, it's something that just passes beyond us.

"The amount [house prices] are coming down is nothing like the amount that would make a difference to a working person down here.

"I'm self-employed, I earn relatively well - there's a lot of people earning a lot less - and we struggle."

Mr McShea said he welcomed the economic boost that second home owners brought to the region.

"A lot of my customers are second home owners, they bring a lot of work and trade into the area. [High house prices] is just an unfortunate situation that happens to be reality."

He is not alone in having problems with the South West property market.

Houses that have gone on the market that would've been selling to second home owners have been selling to local people Richard Copus, estate agent

Shaun Herman, 29, lives in the Redruth area of Cornwall in a shared rental house with his girlfriend and three others.

The student, who also works part-time for a renewable energy company, says rental prices are too high and that getting on to the property ladder is an unrealistic expectation for many.

"It seems you are paying as much [in rent] as if you had a mortgage anyway."

But Richard Copus, a Devon estate agent who is also a spokesman for the National Association of Estate Agents, said the price falls and collapse of the second home market had helped some residents.

"The market was over-inflated across the board.

"What has been noticeable is houses that have gone on the market that would've been selling to second home owners have been selling to local people."

Richard Copus says the second home market is starting to pick up again

He said his firm had recently sold a "picture postcard" cottage on the edge of Dartmoor to a young local person for about £50,000 under the original asking price.

"It's a textbook example of somewhere that would've been snapped up by a second home owner."

But Mr Copus said second home buyers were now starting to re-enter the market again because interest rates are so low that property is seen as a better investment.

Matthew Taylor, Liberal Democrat MP for Truro and St Austell, who was asked by the prime minister to conduct a review into "affordable housing", said - despite the price falls - it was now harder, not easier, for people to get on to the property ladder in South West England.

"On the face of it these [Land Registry] figures look like problem solved, but the problem is worse than it was before."

He said people's difficulty obtaining mortgages with attractive interest rates, coupled with rising unemployment in Cornwall, meant the price falls had not helped most ordinary people.

"Cash buyers are the only winners."