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COUNTRY MARKET COMMENT
Supply-side
economics
Market resilience reflects
basic fundamentals
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Above: Buckinghamshire,
£3 million guide
Top left: Kent, £1.25 million guide
Above far left: Surrey, excess £4 million
Above left: Cornwall, excess £850,000 |
Healthy
markets tend to be predictable and thus dull. This does
not make for good newspaper copy, but it does help those
deciding whether or not to buy and sell. Right across
our network of offices, for example, supply and demand
for property has followed a remarkably consistent pattern
over recent years, varying by just a few percentage points,
year on year, from one month to the next. Given that this
has involved a constant shortage of supply, the result
has been entirely predictable: rising values (in the case
of our sales, by anything from 20% to over 80% over the
last three years, varying from area to area).
This has continued to be the case despite higher interest
rates, partly because for many buyers of the top end properties
which we handle, interest rates compete for influence
with many other economic factors. “Hot at the top”
has been the order of the day and even recent stock market
volatility has yet to impinge much upon the dazzling demand
for the very best country houses. At less glamorous levels,
the prospect of large mortgage payments has begun to take
effect, but not to the degree some expected. The days
when it might have been worth a seller ‘having a
go’ at a clearly excessive price might be gone, but
for every would-be buyer who says he or she cannot afford
a correctly priced property, there is one or more who
can. Again, this reflects surplus demand. Our government
has made it clear that it wishes to address the situation,
but measures put forward such as interest free loans for
a deposit, or cheaper long-term fixed rate mortgages,
will simply increase the ability of first time buyers
to pay and so push up prices even further.
Above from the top:
Manchester, POA
Bedfordshire, £2.25 million guide
Hampshire, £3.5 million guide
Below: West Sussex, £3.25 million
guide |
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Country
rentals
Nor, as some have mooted, is a larger private rental sector
an answer, as all of the supply for it would come from
the same ‘pool’ (unless the government implements
a threat to help councils use existing legislation to
take possession of the estimated 150,000 private properties
left empty for two years or more). Also, it remains true
that the British prefer to buy. Hence the more active
country rental departments run by Jackson-Stops &
Staff tend to be in places such as Sevenoaks and Northampton,
where demand from senior overseas expatriate executives
is strong (in Sevenoaks, most are City commuters; in Northampton,
it is the financial and motor racing / engineering sectors
that provide the international draw).
HIPs and supply
The extension of Home Information Packs to embrace three,
as well as four bedroom houses represents a huge increase
in its scope – and quite a gamble for the DCLG. It
remains a surprise as to how sufficient Energy Inspectors
could have become available in just one month. Thus far,
the legislation has had little impact but it does create
a deliberate barrier to entry to deter ‘less than
fully committed’ sellers – the majority of whom,
in our experience, went on to sell.
HIPs thus restrict supply, though it will probably prove
impossible to identify to what extent. More positively,
the cost of a HIP is now lower than expected (circa £400)
and, in our case at least, the whole thing is swiftly
prepared by one firm. Indeed, whilst it is something we
would always advise our clients to do from the outset,
for registered freeholds there is rarely a need to instruct
your solicitor until a sale is agreed. So it is not a
very high barrier to entry.
NIMBYs and supply
It is only by increasing the supply of housing that long
term affordability issues will be properly addressed.
As a result, it looks increasingly likely that planning
rules will be relaxed, allowing previously inconceivable
development to go ahead. If so, this will inevitably arouse
accusations that local residents who object are ‘NIMBYs’
wishing to ‘preserve villages in aspic’. There
may be something in this, but the ironic thing is that
many of the small country cottages we sell were originally
built as inexpensive homes for farm labourers. If equally
attractive, modern counterparts could be built today,
NIMBY opposition might dissipate, potentially improving
supply to the point at which current pressures ease.
Recreation Cottage, Gloucestershire
£750,000 guide
Immediately adjacent to
the childhood home of Laurie Lee, Recreation Cottage
includes the original village recreation room in
which the author and his friends would have played
as children. |
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