Positively insulated

Sales volumes are above average and country house prices are expected to continue to grow. Given current economic concerns, how is this so?

At the time of writing, the OECD expects 2023 GDP and consumer spending to remain at, or fractionally above, 2022 levels. Alongside, the likes of Hometrack, EY and others are making similarly unexciting predictions for average house prices: they will probably rise next year, but not by much. Having endured a summer of dire economic warnings, such flat forecasts look positively benign. For owners in the middle and upper country house markets, our data is encouraging and the outlook for them, looks more positive still. This is especially so when taking into account the new stamp duty cut for first time buyers, which will help to underpin the market. So where is it all going right?

Above: Lancashire £2,800,000 guide

Towards the end of the holiday season, our Exeter office had so many registered would-be buyers, they decided to make a team effort to physically speak to as many of them as possible, to confirm that they were indeed still looking. Overwhelmingly, the response they got was, ‘Yes, we are’. Many had missed out on several properties. Just as many again felt that they’d not found anywhere because so little had come to market. This was a sentiment with which our director at Exeter, Richard Addington, had much sympathy: “It felt like that to me, because we were always short of stock. Only when I looked back was I reminded that sales volumes have been remarkably high, all year. It’s just that everything sold so quickly, we never had much on the shelf.”

The picture is similar across the country. Such uniformity is very much a post-lockdown phenomenon. Historically, the nature of the infamous ripple effect was that demand was always strong in some places and weak in others. Yet our offices, from Kent to Cornwall, Norfolk to North Yorkshire and the Lancashire coast, have experienced a highly competitive market, simultaneously.

Above: Cornwall £1,500,000 guide

It is true that average times to exchange have increased, though this simply reflects a more normal market in which a higher proportion of sales involve a chain. Also true, is that the property portal websites are reporting an increase in the number of price cuts. However, in the middle and upper areas of the market in which we operate, it’s clear that the only cuts are to prices that were clearly unrealistic in the first place. In the absence of rapid price growth to bail you out, this is inevitable: in property sales, it’s much easier to go up from a sensible price, than to come down from a silly one. It’s all about generating competition.

Finally, whilst Land Registry figures indicate that sales volumes further down the market are a little below pre-pandemic levels, our volumes are well up. Some of this is due to increased market share, but that does not account for it all, by any means. So what is insulating our clients and buyers, from the tougher economic conditions? Essentially, it comes down to money, though the Work From Home phenomenon has played a role, too.

Insulated from higher costs
A high proportion of Jackson-Stops buyers are moving from town to country, selling one house they own, to buy another. Often, they don’t need a mortgage. And when they do, the loan-to-value ratio tends to be low, so they get the best rates (this is true even amongst the young families buying). Thus mortgage rates have less impact on affordability and demand, whilst also making other cost of living increases, more affordable. This is also why higher interest rates are unlikely to increase supply: unmortgaged country house owners are less vulnerable to the hardship which forces people to sell. Buyers do ask about fuel costs, usually in conjunction with checking out the potential for installing renewable energy sources. With money now, you can save much more money, over time.

Above: Surrey £1,800,000 guide

Insulated from fluctuating demand
Working from home has been a factor in the even distribution of demand. The extent varies according to location, but the majority of those buying through us (who have not retired) now intend to work at least partly from home. This is putting previously inaccessible areas within reach of commuters, insulating sellers from normal fluctuations in demand. Indeed, whilst the WFH/office balance will take years to find its long-term norm, the effect on the prosperity and social life of our small market towns and of the villages around them, has begun. We believe it will grow in significance and be permanent, particularly if additional first time buyers can afford to buy in more rural areas.

Demand and volumes in the middle and upper residential market thus remain remarkably strong, with price growth likely to exceed that of lower market levels, for the foreseeable future.

Left: Anglesey £1,700,000 guide

Main image: Cheshire £6,000,000 guide