Two distinct property markets have emerged in 2015, a trend that looks likely to define 2016, according to high-end estate agents Jackson-Stops & Staff, with 44 offices nationwide.
Whilst the mainstream market has prospered in recent months, the higher value markets continue to prove more difficult, as a result of stamp duty reforms back in 2014. There remains a stand-off between buyers and sellers as each remain reluctant to absorb the additional costs of the transaction. Furthermore, the country house market is losing its once strong connection with prime central London, causing further problems for the top end of the market looking forward.
Nicholas Leeming, Chairman of Jackson-Stops & Staff, comments: “In 2015 we have certainly seen an improvement in the middle markets where there has been sustained demand, particularly around the regional centres. However, the top end of the market continues to prove more difficult. Prime Central London is dominated by international buyers and so we are not seeing the traditional ripple effect into the country house market like we did before. This disconnect is likely to remain a market feature for sometime”
With London set to continue to hold its value thanks to its safe haven status amongst international high net worths and the strong rental returns it offers, home-grown buyers are increasingly priced out of the capital. This is in turn influences the nature of demand for the £1 million plus country house market as international buyers, as a rule, do not purchase property in the countryside, according to Jackson-Stops & Staff director Dawn Carritt.
Dawn Carritt also highlights a “mortgage famine” amongst older buyers who are struggling to get second mortgages approved at the upper end of the market. She adds: “Consequently, people are staying put in one property for many years. This trend echoes property patterns seen in the sixties and seventies where people had one family home, a trend that is unfortunately stalling the country house market.”
James Wilson of Jackson-Stops & Staff Shaftesbury has noticed this drought of London buyers commenting: “Whilst we have seen buyers come from far afield, we have seen fewer from London than had been anticipated with most of the non-local buyers arriving from the Home Counties.” Similarly, Brian Bishop of the Taunton office attributes about half of his buyers to London with the rest being local.
Alastair Hancock of Jackson-Stops & Staff Sevenoaks has noticed buyers being more resistant at the top end of the market, commenting: “2015 has been reasonably strong up to £1 million with a lack of good stock in that price range. However, over £1.5 million has been very patchy and consequently there is plenty of choice but not many buyers. That being said, I am hopeful that 2016 will be busier at this end of the market. It seems that many vendors put their plans on hold in 2015 because of the potential uncertainties over the election.”
William Leschallas of Jackson-Stops & Staff Burford adds: “The market at the moment is really sub £1 million and certainly over £1.5 million it is much more difficult.”
Whilst the top end of the market has proved a challenge, the mainstream market is prospering in many areas in the UK. The main challenge here has been a lack of good stock, meaning buyers are more price sensitive than ever.
William Leschallas of Jackson-Stops & Staff Burford comments: “The real issue we all have now is a shortage of supply. We can sell them if we have them, assuming they are at the right price, but the market remains very price sensitive.”
Furthermore, Nick Talbot of Jackson-Stops & Staff York speaks of “the market picking up with a vengeance following the election result.” However he adds: “As we have moved through to the latter part of the year, there is still a great deal of demand but we are short on supply. Going forward, I see demand only increasing but hope that we will begin to see an increase in new instructions as a result of improving confidence among vendors.”
The narrative from Chester is much the same with Nick Withinshaw offering a warning to vendors to be realistic with their pricing. He says: “If anything is even marginally overpriced it falls on deaf ears as buyers are more selective than ever before. In 2015 we have seen an improvement on the previous year, certainly in the middle sector of the market. Properties over a million continue to prove more difficult and one of the biggest problems has been a shortage of stock at all levels of the market, which I suspect will continue through the winter months and into next year. However, providing the economy remains firm, and with interest rates forecast to stay low for another year or two, next year should be promising and build on the steady growth of the previous two years.”
Michael Clark of Jackson-Stops & Staff Exeter continues: “Buyers are very discerning and extremely price sensitive. In Devon, especially, people are moving for quality of life reasons rather than for their job which means that although they are committed to the area generally, they are not constrained by time. Therefore they are prepared to wait until the perfect property comes to market at the perfect price.”
In East Anglia, the story is extremely rosy with deals being completed across the board. Tim Dansie of Jackson-Stops & Staff Ipswich comments: “Suffolk is by far the most affordable county within commuting distance of London and this is now being explored by not just those coming out of the capital but from counties such as Essex, Hertfordshire, Cambridgeshire, Kent and Sussex. If guide prices are correctly set to represent true market value and are not overstated, we are seeing early sales achieved and in a number of instances competitive interest forthcoming. With such a shortage of stock, we are hopeful prices will rise especially in hotspots such as Aldeburgh, Woodbridge and Dedham where a strong market has been recorded. We had a good start to 2015 and there is every indication that 2016 will begin in a similar way.”
Quentin Jackson-Stops has seen a similar story in Northampton. He comments: “We can look back on a year where the residential property market came strongly back to life. Once the results of the General Election were known in May, new instructions picked up in the Northampton area and year on year the volume of properties sold has increased by over 30%.
The greatest increase in sales has been in the middle of the market between £300,000 and £600,000. At the higher price levels, it has been harder to find a purchaser, clearly the result of changes to the Stamp Duty rates in 2014 which have impacted heavily on properties above £1,000,000.
The market for new homes has been particularly strong in 2015 as buyers have become more interested in energy efficiency and the technology that new homes offer in terms of their construction, systems and their fittings. On several sites, where we have been involved, new homes have been selling ‘off plan’ before construction has virtually started. Good sites for small developments are becoming harder to find and the trend for strong new house sales is expected to continue through into next year.
We expect much the same in 2016 with gently rising values for properties up to about £900,000, with the greatest rises being for properties under £500,000. The £1,000,000 plus properties will in all likelihood see little change in value in the next twelve months. However, with interest rates look set to remain low for some time yet and with mortgage finance easier to obtain, we believe that the outlook for Northamptonshire appears rosy for 2016.”