Where property buyers face a sea change

Where property buyers face a sea change

On the face of it, the south coast town of Weymouth is the perfect place in which to invest in a property using the new Sipp tax breaks. Prices there may have doubled in the last three years but most people feel it still has a little further to go. The main road into the town is being upgraded, and in 2012 the Olympic circus will be coming to town in the form of the sailing events.

In total £200m is reportedly being earmarked to upgrade the town and surrounding area. Add in the fact that there is a big demand for lettings, and it's easy to see why property investors are already piling in.

Pity then, any young couples who are trying to buy their first flat. This week we visited Weymouth and found a property market that has left behind all but the wealthiest first-time buyers. Couples with a combined income of £25,000 - if they are lucky - are forced to rent as they struggle to raise the £100,000 required.

In many ways, Weymouth typifies what is going on in small towns across Britain. A lack of white-collar jobs and, in its case, an over-reliance on seasonal tourism, means incomes are comparatively low. And yet property prices are almost on a par with its nearby, and far-wealthier neighbour, Bournemouth.

The cheapest one-bed flats now start at £90,000, but, more usually, cost nearer to £110,000 - small 70s semis, popular with young families, are closer to £150,000. The town is already popular with retiring.....continued below

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couples, but more worryingly for first-time buyers, it is becoming increasingly popular with experienced buy-to-let investors, keen to cash in on the town's rising status.

Several big-name property developers have built a number of complexes on the pretty dockside, but they have been far out of the reach of most first-time buyers.

Robert Wilson, a director of estate agent Wilson Simons, says his staff have noticed a significant increase in interest from "mature" buyers who are entering the town with one thing on their mind - buy-to-let.

"A colleague has noticed a few enquires from investors citing the Sipp rules as their reason to invest, and it's already underway.

"Anything under £150,000 is selling very quickly - you can always tell the private investors because they don't tend to be so worried about the market dipping," he says.

Alex Hill at next-door agents Mann Countrywide tells a similar story and suggests that the market is being fuelled by outsiders - mostly from the Home Counties, but also from the Midlands. "Some are buying second homes or are looking to retire here, others are buying-to-let.

"I've noticed increased parental help as first-time buyers have been struggling to borrow enough. There's a feeling that the town is on the up, but it will be bad news for those at the bottom of the ladder. If prices are pushed up another 20%, it will undoubtedly push the cheapest property beyond the reach of first-time buyers."

Cllr Michael Goodman, at Weymouth and Portland Borough Council, says he's becoming increasingly concerned at the lack of affordable housing for local residents.

"The main problem we have is that we are a low wage economy. We are too reliant on the bucket and spade trade that doesn't create well-paid jobs.