Nick Owens, senior associate in Oxford law firm Manches’ residential property team, is witnessing a strong recovery at the top end of the city’s housing market

The usual increase in activity that spring brings to the property market arrived early for the prime residential sector this year.

The increase in stamp duty land tax from four to five per cent for residential property in the £1m-plus price range on April 6 led to a flurry of activity from buyers aiming to complete their purchases before the deadline.

Latest research published by Savills shows the average price of its transactions in the first quarter of 2011 rose by about 65 per cent from the 2010 annual average.

It is clear there was a flurry of activity in the central and North Oxford prime market too, with a substantial increase in the number of £1m-plus property sales transactions completing before the deadline.

Giles Lawton of the Oxford office of Savills believes there is significant evidence now that the very best properties are achieving prices over £1,000 per square foot, with a number of sales at this level having been achieved recently.

The buyer profile is changing, with more international buyers looking for good quality homes in Oxford, particularly those from South East Asia.

From a property lawyer’s perspective, it was interesting to see buyers relax their attitude to minor issues that can sometimes lead buyers to delay their purchases in the rush to complete.

Historically, 2010 started strongly with transaction volumes up substantially on the same period in 2009, but this growth stalled in August last year and the transaction numbers were down on the same period in 2009 for every following month to the end of 2010.

Given the overall number of transactions in December 2010 were 38 per cent fewer than December 2009, the doom and gloom merchants were out in full force.

But volumes in January and February 2011 were only marginally down on the previous year, followed by increased activity in March.

Having moved through the consecutive Bank Holidays, we expect attention to return and given that June, July and August were the busiest months in terms of sales volumes last year — bucking all known trends — there is no reason to suspect they probably will be again this year.

Mark Charter at Carter Jonas in Summertown revealed the agency had been very busy over the Easter period.

The lack of quality supply in central and North Oxford is keeping prices strong.

Rupert Leigh-Wood at John D Wood in Summertown, reported that there are also a number of good quality properties coming to the market after the holiday period and the outlook remains very positive.

What of the coming months? Sadly, no-one has a crystal ball but the key theme for the most desirable areas Oxford remains the short supply of properties.

In the depth of the recession of the late 1980s when interest rates were more than 14 per cent, the prices in central and North Oxford levelled and perhaps decreased very slightly, but nothing like the price declines of up to 40 per cent that were seen outside that area.

The Council of Mortgage Lenders reported there were 32,300 loans for house purchase made in February 2011, up eight per cent on January. The biggest increase came from first time buyers, which is always taken as a sign the housing market is on the move again.

Frank Webster, of Oxfordshire lettings agency Finders Keepers, said: “The average age of the first time buyer is now probably 38 or 39.

“The rental market remains strong with the lack of supply keeping rental levels steady. The shortage of property was at its worst just before Christmas, and although it has improved, the supply of good rental properties remains a concern.”

Given the strength of the rental market, Mr Webster believes it is only a matter of time before we see institutional investors move in to the residential property market and become a larger force, as there simply are not enough individual buy-to-let investors.

This may be assisted with the change in the last Budget to the way stamp duty is paid on portfolio transactions, where the stamp duty paid is now calculated on the average price of the property, rather than on the aggregate amount.

So the lure of “location, location, location” prevails. The shortage of supply of houses in central and North Oxford continues to push up prices at the top end of the market.

Prices for the very best of these properties broke through the £7m price barrier last year, and a number of transactions at this level and above have completed since, and continue to do so.

The lure of the excellent schools in North Oxford continues to attract wealthy buyers from outside the city, and the shortage of supply keeps prices strong.

n Nick Owens is a senior associate in Manches’ residential property team, 01865 813772.

Web: www.manches.com