Recent press reports of a ‘surge’ in house prices followed the latest RICS monthly survey (‘house prices are rising at their fastest rate since 2006’) – which will probably bemuse those owners who are being encouraged by their agents to lower their sights (the same RICS report stated that asking prices had dropped by 1.6%!).
Certainly, with mortgage lending at its highest since 2008, it is the ability of first or second time buyers to pay, balanced against the shortage of properties in the market, that is the key influence on pricing. Mortgage demand is increased by initiatives such as the government’s ‘Help to Buy’ programme, and the recent Bank of England statement predicting that low interest rates will remain until unemployment falls below 7% (i.e. when we are well out of recession).
Trouble is, there is no such thing as ‘the’ property market; what’s been happening in central London (prices up by 7% year on year – and predictions of 40% price rises over the next five years) is not even mirrored by Putney or Hammersmith, let alone the surrounding Home Counties (where prices, in some areas, have fallen by an equivalent percentage).
As far as the ‘country house’ market is concerned, low borrowing rates have provided little reassurance to those whose income doesn’t qualify (as those whose income hinges largely on bonuses have found) – and many buyers have ‘ring fenced’ a ‘pot’ for their children’s education whilst economic uncertainty has lasted, effectively reducing their property purchasing budget.
What have the repercussions been on the ‘country house’ market across the south east? Properties in popular towns (such as Sevenoaks, Tunbridge Wells, Haywards Heath, etc) have been enjoying a higher level of demand than those in the country – but, in the £500,000 – £1½ million price bracket, even these have been selling well (if accurately priced). Over the £2 million level, the market from Ashford to Guildford has been surprisingly flat; possibly reflecting lack of confidence in the economy, the difficulty of knowing there will be something to purchase once the property sells, the disincentive of paying 7% stamp duty, or the trend for some de-centralising buyers to rent in the country and keep/let out their Fulham house. In fact, it has probably been a combination of all these – remains to be seen.
Meanwhile, above the £3 – £4 million level, notable country houses and small estates continue to hold a fascination for buyers lucky enough to be able to afford a lifestyle, rather than worry about heating costs, mortgage repayments , etc.
There are definite signs that confidence is improving, however – and, by the spring of 2014, we predict a country market showing more choice and, with it, more activity.