Ban on new home sales to holiday buyers ‘backfires’ as property prices rise

A ban on second homes in a popular seaside town has backfired, a new report claims.

In 2016, residents of St Ives in Cornwall voted to ban the sale of new houses as second homes.

The aim was to discourage wealthy holiday home owners from pricing local buyers out of the market.

At the time of the local referendum which resulted in the ban, average local house prices were £323,000.

Since the ban, Land Registry figures show that prices for new homes in St Ives have fallen by 13%, but prices for secondhand homes have increased by 7.7% – meaning an overall rise.

Professor Christian Hilber of the London School of Economics said that the ban had resulted in a “significant adverse effect on the local economy”.

He said that demand from second home buyers had simply switched from new-builds to existing homes, and to other nearby towns. Builders had gone elsewhere, taking local jobs with them.

He said that the ban could actually have increased the out-of-season ‘ghost town’ effect, and had hurt both the construction and tourism sectors.

He argued that an annual tax on second homes would be a better alternative.

Local councilor Andrew Mitchell disagreed with the report, saying it was too early to tell.

He said: “I think what could be damaging to tourism is more tourism.”

Other seaside locations suffering the same winter tumbleweed effect have been looking closely at the St Ives ban.

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2 Comments

  1. SE

    Wow!! Surely it was obvious that the demand would shift, and as second home buyers considered that at some point there might be an outright ban, increase?!?

    As someone who lives in a tourist hotspot, I have felt this upward pressure on price but I have also seen what job creation (and loss) has happened as the cause of the local authority meddling in legislation that affects the tourism trade.

    That being said, with more visitors than ever to the Lake District, the outlying more affordable towns are now thriving.

    if the tourists are cut off, the money slows, the jobs reduce and the demand for housing for local worker diminishes anyway!!

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  2. Woodentop

    Who would of thought it, if you stopped them buying new builds, the market would move to where they can. Next time a council comes out with such inspiration, they want to consider the knock on effect and not be so narrow minded.

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