Buyers who can no longer afford the steep prices of property in London are increasingly moving outwards and seeking new homes in the surrounding counties, the Cotswolds and even further afield.
The latest update report from The Buy Solution, the independent buying consultancy of Knight Frank, reports an unusually busy start to the year with several exchanges in the Southern and Home Counties regions.
The highest level of activity in the country market is in the £1 million to £2.5 million price bracket and the level of buyers coming out of London into the Cotswolds and Central region has increased in 2012.
It says there is an enormous demand for good size investment commercial land of 500 acres plus but this is in incredibly short supply. Also international buyers continue to dominate in the London market.
'The international buyer continues to drive the markets in London and to a slightly lesser extent in the Home Counties, the real impact of the stamp duty increase remains to be seen but by and large, we do not believe that the extra 2% will make too much of a difference once the dust has settled,' said Philip Selway, managing partner of The Buying Solution.
'Indeed, since the Budget announcement, if anything, we have seen an increase in the number of enquiries to purchase in London and in all regions in the country, particularly in those areas beyond the normal commuting distances,' he added.
In the prime central London the small number of best in class properties available continue to attract an enormous amount of interest, which often results in sales being concluded with best offers, London team spokesman Rachel Thompson said.
'We have also noticed an increase in interest in those areas that are not considered classic prime central London, such as Marylebone. Potential buyers appear to enjoy the slightly more relaxed atmosphere and the high number of independent shops and cafés. Notting Hill is also attracting buyers who are searching for a sense of community that is sometimes missing from residential hot spots such as Belgravia or Knightsbridge. This is due to the fact that many properties are owned in these locations by those that are only in London for a few weeks of the year,' she explained.
In the Home Counties of Berkshire, Buckinghamshire, Surrey, South Oxfordshire and West Sussex Nick Mead, associate in the Home Counties, said he has seen a flurry of activity in the last six weeks. 'We have either negotiated on, or agreed the purchase of, houses for a number clients which is unusual for this time of the year. Traditionally, April to June is seen as the most active time for the industry, with more houses coming to the market and more active and committed buyers,' he pointed out.
'I believe that this emergence of activity is due to the beginnings of renewed confidence in the property market. With the Euro crisis slipping off the front pages and a little more certainty in the financial markets, buyers are more prepared to commit. Indeed, some of the old housing stock is beginning to sell as a result, with some of the best properties receiving multiple offers. Although, notably, no one is getting too over excited about prices, usually sticking to, on or near, the guide price,' he said.
'It remains to be seen whether the increase in stamp duty will have a long term effect in the Home Counties, although I do think that, ultimately, the increases are likely to push the undecided out of the market,' he added.
In the Southern region covering the M3/M4 corridors of West Berkshire, Hampshire, Wiltshire, Dorset and Somerset, Bobby Hall, head of the Southern Region, also reports an unusual high level of demand and transactions, with six exchanges to date as opposed to the usual standard of two or three during this period.
'Most of the properties have been in the £1 million to £2 million price bracket and are needs driven buyers who are moving out of London and want to complete their purchase ready for children starting the new school year in September. We also exchanged on two of properties in the £3 million to £5 million price range, prior to the SDLT increase but the exchange dates were not as a result of the increases,' he explained.
'The stamp duty increase, however, will obviously affect potential buyer's budgets but this will be factored into our negotiations strategy. It is clear that both vendors and purchasers will end up bearing the brunt of the increase in taxation. Similarly, the fact that VAT is no longer exempt on Listed building renovation works will be a factor in potential purchaser's budget calculations.
'Whilst both of these changes will affect our clients thought processes, the our region is still deemed an ideal area in which to live, with good schools, efficient road and rail links and attractive country. All of these points maintain both the interest levels and competitiveness in purchasing appealing properties in the area,' he added.
In the Cotswolds and Central Region buyers appear to be much more confident about life than they were this time last year when there was a general feeling that prices still looked 10% to 15% over the top in the areas.
'Over the last three to six months, sellers and their agents have been reacting to this sentiment and those properties that have been reduced to realistic levels are now beginning to sell. As we move into spring, we are starting to see new stock coming to the market, although the outlook on supply at over £1 million still looks very thin. This leads to the temptation for sellers and their agents to quote ambitious asking prices but buyers remain very price sensitive, and with the recent rise in stamp duty, we do not see this changing,' explained the region's head Jonathan Bramwell.
'The level of buyers coming out of London has also increased during 2012 and there is a perception among these buyers that we may now have seen the bottom of the market in the country and that London prices are close to their peak. Hence they are looking to trade in on the attractive price gap between the country and London,' he added.
Buyers are looking for family homes close to decent schools or mainline stations such as Didcot Parkway, Oxford, Kemble, Bicester and Banbury. 'We are also noticing a growing trend of buyers wanting to move into Oxford or Cheltenham, who are looking to avoid lengthy congested school runs, so these markets remain very active. These buyers then often look to buy a secondary house in the country for use at weekends and holidays,' he explained.
But there have been very few transactions at over £5 million within the last 12 months in the region. 'The market here is very much split into those who have to sell and those who will only sell at their price and can afford to wait for the right buyer. The latter are more likely to be offered on a private basis. Therefore negotiations can take months with a Mexican stand off often developing between the buyer and seller, until one finally blinks. Although best in class still sells and premiums continue to be paid, many buyers now need comfort from competition to do this,' he added.
The proposed High Speed Rail link between London and Birmingham remains very much a talking point in the north eastern half of this region since the Government announced the chosen route in January. 'The consensus is that this will go ahead as it has cross party support, although campaign groups and local authorities are threatening legal challenges. Therefore, careful consideration needs to be given when buying in this area as it is already impacting on prices and supply along the proposed route. We are also looking at the wider impact of this within the region which is bound to open up new quarries for gravel extraction with construction due to begin in 2016 and it finishing in 2026,' Bramwell pointed out.
There is a continued shortage of both land and estates. 'There is enormous demand for good size investment commercial land packages of more than 500 acres but ideally more than 1,000 acres, although the supply is incredibly short. Those owning these sorts of packages will see them as a sound and safe investment. There is also the issue of where a vendor would invest money realised from a sale at these levels. As a result of the shortage of supply and the strength of demand, we anticipate price increases on a pound per acre basis for the best quality,' said Mark Lawson, partner for Country Estates and Land.
'So far as country estates are concerned, there remains a reluctance to pay large money for an estate dominated by the residential element unless it is of the best quality and at a reasonable price. As a result, demand and supply is limited throughout the country, although demand strengthens closer into London,' he explained.
SOURCE Propertywire