Latest RICS figures show stocks of available houses for sale at a record low, yet Land Registry reports show the number of sales completed each month to be stable, with little change over recent months or, indeed, years. This apparently contradictory state of affairs reflects the underlying constraints – and remarkable stability – of the current country house market.
Ask anyone involved in property about the current market and their response will almost always involve terms such as ‘price sensitivity’, ‘sluggishness’ and, above all, ‘uncertainty’. Politically, of course, times are highly uncertain and political uncertainties can all too easily translate into economic ones, quickly affecting high-end salaries, bonuses and house prices. From another perspective, however, the country house market has never been more stable. This stability is maintaining sales volumes overall and is clearly reflected in strong sales performances from Jackson-Stops offices across the country.
A high proportion of the country house sales we are achieving now involve buyers and sellers who have been in the market for some time. Whatever their expectations at the outset, they have come to recognise that the cornerstones of the current market are unlikely to change significantly in the near future.
Most importantly, interest rates are not only low, the growing availability of low rate, five and ten year fixed mortgages, suggests they are staying put for a very long time. Constant interest rates make supply and demand much more predictable.
Secondly, house prices have, region by region, been playing their part in the London ‘ripple effect’ story. Just like real ripples in a pond, each ripple involves markedly less drama than the initial splash. Hence, Greater London price growth having dipped slightly into the negative in 2018(1), regional price rises are likely to weaken when that ripple reaches them, but stay positive – so not much change here, either.
Finally demand, too, is set to remain constant in relation to supply, but constrained. Tight credit controls and slow salary growth are limiting what buyers can pay, whilst high employment, reduced competition from private landlords, stamp duty relief and ‘Help to Buy’ incentives have all boosted demand, though primarily at lower price levels. House purchase chains (not at all like real chains) need support from the bottom up. Thus the fact that the number of first time buyers in the UK recently hit its highest level in twelve years(2), accounting for 20% of all sales, bodes well for the long-term health of the market. In the shorter term, however, limits to affordability at higher market levels, combined with economic fears, have reduced demand more or less in line with reduced supply. Again, this balance produces little pressure on prices in either direction and is unlikely to change soon, especially as so many sellers, are buyers too.
If – as expected – present political uncertainties continue for many more months, if not years, none of these cornerstone features of the current market will change. It is a surprisingly predictable, stable position.
Buyers and sellers get serious
The market has been as it is for so long, it’s perhaps not surprising that those who have been active players within it for some time, have seen the writing on the wall and now account for well over half of our transactions. When you have been looking to buy or sell for several months, you know a fair deal when you see one. A year ago, a high proportion of buyers were hoping for a bargain, only to be faced with sellers hoping for a ‘wow’ price. Today, much more often, common sense prevails. Correctly priced houses sell without undue delay, those priced too highly, languish. Would-be buyers who have not even put the house they’d need to sell on the market, let alone secured a buyer, find that sellers will not consider their offers. Those who do have a buyer (i.e bottom-up support for their potential chain), or no dependent sale, find their offers are taken very seriously indeed.
Higher sales despite low stocks
The greater market awareness and serious intent amongst buyers and sellers alike is at the heart of why sales volumes have remained constant in the face of lower supply and demand. Those in the market, want to do a deal. This, at the very least, makes it efficient. Alan King, who heads up Jackson-Stops’ Dorking and Reigate offices, goes further. “It’s a terrific market because buyers and sellers know where they stand. They are not worried about rapidly changing prices or interest rates, nor about being gazumped or gazundered. Sellers can focus on the quality of the buyer, buyers on the quality of the house. It’s the fairest, most transparent market I’ve ever known.”