When people talk about the UK property market they could be referring to anything from a bungalow in the Orkneys to an office block in the City of London. When we talk about it we mean country houses, estates and London homes worth in excess of 2m. And the best word to describe this market in the last 12 months is ‘WOW’!
We should qualify that ‘WOW’ because what we have seen over the last few years is a widening gap between those properties that are snag free and those that are not. Good houses in perfect locations are selling very well and selling very quickly, irrespective of whether they are 3m rectories or 20m estates.
Property percentage rise
It is difficult to put percentage rises on these properties because, unlike the mass market, no two houses are ever the same. However there are countless stories of properties being priced at say 2.75m and selling for over 3m, or coming on at 4m and going for over 5m. One was brought to the market at 3.75m and sold for over 5m. Some might say that these houses were undervalued in the first place to create interest but having previously been a selling agent I know that this is unlikely to account for much of the uplift in prices. The initial offer price is generally based on previous sales for comparable properties (unless the vendors have their own strong opinions!). But when two or three keen wealthy buyers decide that a particular property is perfect for them, the value of that property can be bid 20% or 30% above the guide price in just a couple of days.
The standard comment in all those agents’ brochures refers to low interest rates and city bonuses. The fact is that there has been an enormous amount of wealth created through many different sources over the last 20 years and when a Brit has a bit of cash, he goes out and buys a nice property. And it is not just people who work in the City. You talk to the selling agents and the chances are that the buyer of a good country property has a business in the local town. That apart, when wealth is passed through the generations to children or grandchildren the money will often go straight back into a new property. And then there are the international buyers. We may have our gripes from time to time about the “state of the country” but people from overseas still love to live here and for some there are tax advantages. Mostly overseas buyers don’t get further out of London than Wentworth or St Georges Hill, but the Russians are certainly buying estates and large country houses.
Upward trend in prices?
Will it continue? When we started in this business, as long ago as 1976 in Jonathan’s case, we had been through some bumpy property markets and then it was horrible from 1991 through to 1995. Although there have been moments of worry over the last 10 years (and these will continue to occur from time to time), the upward trend in prices for the very best qualities will continue provided demand continues to exceed supply. For now, we don’t see this trend changing.
This means that it is more important than ever for prospective buyers to be at the front of the queue. A good property will sell quickly so it helps enormously to be there first to make sure somebody else does not take it out of the market before you get a chance to see it. Just bear in mind that ‘WOW’ factor!
Jonathan and Saul, July 2006