A newly published report by the Royal Institution of Chartered Surveyors indicates that the British property market had a slow start to the year. The institution polls member surveyors to compile its monthly report and, in January, 7% more respondents reported a drop in demand, while 3% more flagged up a dip in supply. Some 31% more surveyors also mentioned a decline in prices, although the majority of respondents said they remained unchanged over December.
By contrast, anecdotal evidence from the country house market paints a very different picture. Although the 2010 Land Registry data analysed by property commentator Henry Pryor shows that sales of properties priced £1m or more were 40% less than at market peak, volumes slightly recovered last year over 2009 (up 1.22%) and the prospects for 2011 look promising.
In next week’s issue of Country Life – February 16 – our property correspondent, Penny Churchill, writes that, over the course of one month, Strutt & Parker estate agents sold no less than eight houses priced at £1m or more through the Canterbury and Sevenoaks offices alone. David Adams of Chesterton Humberts said on Twitter that, in the first six weeks of 2011, his company’s UK sales were up over both 2010 and 2009. Property search agents The Buying Solution also twittered about the healthy state of affairs for the £1m to £3m segment (though they said that the £8m+ market is quiet) and Savills told me that they have seen a very encouraging start to the year, with increases in both applicant registrations and viewing levels.
Of course, the question is whether this sudden bout of activity is spurious-a spark caused by the looming increase in Stamp Duty, which will apply from 5 April 2011, coupled with upcoming City bonuses-or destined to last.
At the risk of sounding solomonically wishy-washy, I’d hazard it is a bit of both. Buyers will probably lose some of their urgency after April 6, and the cautious instincts instilled in them by the recession will kick in again. But, barring a spike in interest rates or a marked worsening of the economy, the influx of foreign wealth into London and the rising values of land should continue to underpin demand for prime capital property and country estates alike.
Whether this will translate into more sales, however, remains to be seen. We are experiencing a multiple tier market-split not just along the usual dichotomy between prime and mainstream housing but also, within the premium segment, between blighted and ‘perfect’ properties (where by perfect I mean unblemished homes in good locations).
Perfect properties will sell quickly and well. Tarnished ones just won’t float the prime buyers’ boat. And the market is desperately short of good quality stock. Some prospective country house vendors are still put off by valuations that fall short of their expectations and many others have concrete concerns that, with supply so limited, they won’t be able to find any other property they like if they sell their own, so they stay put in a vicious circle of diminishing stock.
If this doesn’t change later in the year, I expect we will see intense competition for the few good homes that come up for sale, and a lot of second rate stuff languishing on the sides like a Victorian debutante past her prime.