Jackson-Stops & Staff

From the Home Counties to Cheshire, demand at £1 million plus exploded early in 2006 and shows no sign of abating, pushing prices in some categories up sharply. Meanwhile, at the still-exclusive but more mainstream £500,000 to £1 million levels, volumes have also increased markedly, though with greater price sensitivity.

One recent sale by our Midhurst office exemplifies the top end of the market of late. Marketed at a carefully chosen guide price of £2 million, the 15th century farmhouse attracted immediate, strong interest and a successful bid of £2.4 million – within a week. The ‘bulls at large in central London’ reported in our last issue appear to have spread out and are making their presence felt. Countrywide, all of this firm’s 40 offices report much stronger trading than last year, with no shortage of demand.

As a rule – and despite strong demand – the further down the price scale one moves in the current market, the more price sensitive the buyers are. The main evidence for this is that whilst properties perceived as ‘correctly’ priced are selling in days, those seen as over-priced are tending to be ignored, making pricing an even more important art than usual. This position may ease if, as some reports suggest, senior managers are beginning to enjoy the sort of pay increases seen by company owners and directors. In the meantime, with job security at, according to a recent Lloyds TSB survey, a six month high, but household debt also high, many buyers are keen but working pretty close to their limits. They are also more disciplined about what they can pay, thanks to a general move by lenders, our
colleagues at JSS Private Finance report, to base maximum advances not on a multiple of salaries, but on what buyers demonstrate they can afford. In most cases, this process results in the offer of a larger loan than under the old system. As ever, buyers then look at the highest-priced properties they can afford but, armed with greater clarity, know that there is absolutely no ‘wiggle room’ on their upper limit. Hence the high volumes but high price sensitivity.

And the growth in volumes has been quite remarkable, exceptionally so at the top end (see table). Arguably, this supports those who suspect the Bank of England’s Monetary Policy Committee to be more heavily influenced by the property market than it should. Possibly so, but, like all of us, the MPC has broader interests and, realistically, an increase that will amount to barely more than £50 a month on a £250,000 loan is unlikely to have much more than a psychological influence. If it has that influence and so continues to strike the delicate balance between economic confidence and high levels of personal debt, the healthy, active market that we have enjoyed for many months, will persist.

From the top down:
Somerset/Dorset borders: £3 million guide
North Yorkshire, £2 million guide
Hampshire, £2.5 million guide

Above left: Dorset, £1.2 million guide

Below: Buckinghamshire, £1.5 million guide

Land Registry
Recorded Sales	2005, 1st half	2006, 1st half	% difference
Up to 500,000	366725	472761	+29
500,001 - 1,000,000	7,908	12,161	+54
1,000,001 and over	1373	2278	+66

Below left: South devon, 725,000 guide
Below right: Essex, excess £1.75 million
Bottom (house and view):
Suffolk £695,000 guide