Online House Hunter: The country beckons
IT’S not all bad news in the property world. To make sweeping generalisations about property prices being in turmoil or in the doldrums belies the complexity of the national situation.
Some sectors of the housing market are having a tough time – but others are doing remarkably well.
And one of those seeing something of a revival is the prime country house market which has seen a half per cent rise in the first quarter of 2011. This off-set a slight dip in the second half of 2010 but in fact there had been good year-on-year increases throughout the whole of 2010.
Liam Bailey, head of residential research at Knight Frank, said: “The UK housing market has been experiencing difficult conditions since the middle of last year, and the prime country house market did not escape this trend.
“Prices fell in the second half of 2010 across most regions. However, the revival in the London market since the autumn has begun to filter through to the country house market. With foreign buyers happily buying over 50 per cent of central London £2m+ properties, some of these vendors are now looking to move into the country house market.
“For London buyers, moving to the country at the current time makes a lot of sense. Prices in London are 30 per cent higher then they were in March 2009; in the country prices are up only seven per cent over the same period. In short, this means that someone selling in London and moving to the country has more than 20 per cent additional spending power now compared to two years ago.
“While we ought not to expect rapid price growth from this point, it would seem fair to assume that the best country house properties will see further rises over the next few months.”
There are many factors that can push property prices up or down and one of those is shortage of supply – something being experienced acutely in some parts of the UK’s country property market.
Rupert Sweeting, head of the country department at Knight Frank, comments: “With an imbalance of supply and demand in the prime country property market and the shortage of supply becoming quite acute in some areas such as the Cotswolds and Oxfordshire, we are confident that prime houses that are sensibly priced will attract considerable interest.
“Price rises for the best of the best are likely to occur and those vendors who go to the market now will be well rewarded. The ripple effect from London is spreading, albeit very slowly. Prices within a two hour radius of London are creeping up, however, more than two hours away from the capital it is not so straightforward. Buyers from London will get “more bang for their buck” the further they go from London.”
Of course, anyone looking to buy a £1m plus property at the moment has to contend with an increase in stamp duty to five per cent.
The property website Zoopla point out that that the increase in stamp duty will cost £1m plus buyers another £17,112 on average. And they make the interesting point that it is as much a regional tax as a wealth tax since 85 per cent of the total stamp duty paid on £1m+ properties last year came from transactions in London and the South East.
Nicholas Leeming, of Zoopla, said: “The government has identified a rich seam of revenue by raising taxes on those buying the most expensive properties in the country. However, with £1m buying little more than a 2 bedroom flat in some parts of the capital, the extra stamp duty will not be insignificant for families trying to move up the property ladder in and around London, where the lion’s share of the burden will fall. We may see a small tick up in transactions ahead of April with some buyers trying to beat the deadline but overall the rate change is unlikely to have a major impact on the performance of the prime market over the longer term.”
Knight Frank estate agents saw £333m of transactions in the three weeks leading up to April 5 (compared to £74m in the same period in 2010) but suspect there will be little impact now the tax rise has taken place. Mr Sweeting said: “Buyers have accepted that, in the grand scheme, it is an amount that they can and will swallow. It would have caused a lot more distress had the £1m stamp duty been bumped up by three per cent or more. Given the stamp duty on a £3m home purchase is now £150,000, I imagine that stamp duty avoidance schemes will become more popular, as buyers try to avoid paying such a significant amount to the government.”
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