Welcome surge in prestige house and holiday home sales driven by availability, as a calmer market encourages owners who must sell to buy, to make their move.
In Chipping Campden, Rupert Wakley’s Cotswold team has enjoyed a revival in sales above £2 million to levels not seen there since the SDLT changes of nearly a decade ago. Many other regions, especially the South West and North West (where shortage of stock remains an obstacle) have seen similar if less dramatic increases in high end sales. Nor is the readiness of the more monied amongst us to spend their money, restricted to the purchase of main homes. We have seen an increase in holiday home purchases too. In this, our experience echoes the most recent update to the English Housing Survey, to which we shall return.
Below: Goostrey, Cheshire. Offers in excess of £10,000,000.
Mixed impact of higher interest rates
First though, a little dose of reality. Like a tax on buying, higher interest rates suppress inflation and sales. That is their purpose and, in mid-summer, our year-on-year volume of sales was down, as was our number of wouldbe buyers and property viewings. In most areas (less so in the North) prices are down, too, on those of the ‘pre-Truss’ era, though not dramatically.
Stock levels were, and remain, up. For those who want to both sell and buy, this is good: there are houses for sale, to see. A year ago, few houses were on the market for as much as a couple of days. Pressure to commit was intense and non-cash buyers felt all but excluded. Paradoxically, the higher stock resulting from higher interest rates is encouraging confidence amongst owners that they will find the house they want, so they are putting their property on the market, too. In particular, owners of larger, more prestigious properties – often retired – who want to downsize, can now find what they want and proceed at a pace that suits them. This greater availability of the very best houses is exactly what the high end buyers have been waiting for and, because higher interest rates are less of an obstacle (and often a benefit) when you have money, they need not hesitate.
Below: Barnham, West Sussex. Offers in excess of £4,100,000
Stamp duty: commitment and relief
That literal tax on buying, stamp duty, gets very high at the high end: over £150,000 at two million and over £270,000, at three. This favours those looking for a long-term home. It also, according to Daryl Parr at our Colchester office, makes buyers keen to get it right: “They give lots of detail, ask dozens of questions and check out areas, village by village. When they do buy, it’s with genuine commitment to the location, which is tremendously welcome".
It helps that a significant proportion of purchasers are able to secure some measure of SDLT relief. Properties that qualify can include those with some non-residential use and those with a separate dwelling (see ‘Multiple Dwelling Relief’ on the gov.uk website). This is a complex area but, even at lower price levels, the sums involved are so large that it’s best to get specialist advice before you set your budget. You might have more than you expect.
Below: Dorking, Surrey. Guide price of £2,000,000.
Holiday home shift to UK
The turmoil of recent years has been so great that mere mention of the major causes (pandemic, Brexit and war in Ukraine) can cause eyes to roll. Their impact continues regardless. It is evident in the expansion of commuter belts and need for work spaces at home, in the demand for energy efficient homes and, builders still being elusive and expensive, in premiums for fully renovated and new properties. One trend, reported in the latest update to the government's English Housing Survey, is perhaps typical of our times: more UK holiday home owners (60%) now have a holiday home in the UK, than abroad. This reverses the position of a decade ago when the ‘overseas majority’ was, appropriately perhaps, 52/48. Feedback from our coastal offices suggests that the cause is not just the 90 day EU Schengen area limit. It’s also that families who moved out of London and other major cities during the lockdowns, liked it. They now want a bolt-hole they can enjoy at any time of the year, without having to get there via an airport and passport check.
Below: Lydeard St. Lawrence, Somerset. Offers in excess of £2,000,000.
The English Housing Survey also showed a jump in vacant stock of nearly 4%, or 34,000 dwellings. This was seen as shockingly wasteful by the press and charities for the homeless, but the period in question included the rather more shocking figure of 123,000 excess deaths due to Covid 19. Bearing in mind that securing probate and selling a house rarely takes less than six months, taking average figures for ages, home ownership and those living alone, it is possible that almost all of that increase resulted from the pandemic. Indeed, the region with the highest average age – the South West – also saw, at 7.8%, by far the greatest jump in the proportion of vacant homes.
Looking ahead, we expect the combination of high interest rates and a national shortage of homes, to favour an active but slower mainstream market, with resistance to the downward pressure on prices. The high end is not immune from these factors, but it is heavily insulated, especially while buyers enjoy a long-awaited increase in supply.
