London
Our own view is that prices in London may fall marginally in the early part of this year, but will bounce back and be broadly neutral over twelve months.
In Prime Central London (PCL) prices slightly yo-yoed through 2024, ending the year marginally down, some 18% off the peak of 2015 according to Knight Frank. As a result we have been acquiring properties for clients in the last year at times for significantly less than the sellers paid for their property well over ten years ago. Notwithstanding our London team unexpectedly had a record year in 2024 and enquiry levels suggest that in an ever-uncertain world there are many who still see owning property in London as an attractive, safe and stable long-term hold, a key element of a global portfolio.
Commentators are divided over what the coming year holds for PCL values. At one extreme Savills predicting a fall of 4% whilst Strutt & Parker suggest a rise of as much as 5%.
We think it may take a little time for international buyers to come to terms with yet higher stamp duty rates (now maxing out at a whopping 19%) and changes to the non-dom status but we think this will be relatively short-lived. Our view is that there could still be some good buying opportunities out there in the coming months, but these will slowly dry up as transaction levels increase. We think the year will end with prices more or less at equilibrium.
One thing we have noticed over the last few years is a steady increase in demand from international clients for super luxury long-term rentals. There are those who understandably cannot justify paying such exorbitant amounts in taxes for a home they may not occupy for more than a few years. They would rather invest their money elsewhere and throw money at renting instead.
Country
We predict a testing year for the country house market.
In the prime country market, prices have remained relatively stable over the last twelve months, although overall we estimate a drop of about 2%. Transaction levels were also well down. By July deals above £5 million were down by a third on the previous year, whilst deals over £8 million had nearly halved. Much of the activity focussed on the sub £2 million market where buyers are more likely to be moving by necessity.
Some selling agents are bullish about their predictions for the coming year, suggesting in part there is pent up demand from discretionary buyers. However many of the same agents report a lack of serious, motivated buyers, the crème de la crème being almost exclusively represented by buying agents. There also remains a shortage of best-in-class stock, especially that is sensibly priced. All too often there is a huge disconnect between sellers and our own expectations of what a house is worth.
Even when great houses are available many buyers remain incredibly cautious, in many cases seeking a perfection that in reality probably doesn’t exist. Buying and selling agents alike describe doing deals right now as like pulling hen’s teeth.
We will have to wait a little longer before transaction volumes return to their pre-pandemic levels. We therefore expect it will be a challenging market this year, but one we relish. There will still be some good opportunities and it is in these markets where our size, experience and professionalism make the difference for clients.
Farms and Estates
Land values have remained largely static over the last twelve months, albeit there has been an increase in supply.
It is likely to take some years before the impact of the government’s changes to Agricultural Property Relief on both the availability and value of agricultural property will become clear. Our own view is that however unwelcome the changes, our hope is smaller farmers will ultimately find a way to make it work whilst larger wealthier landowners will either find a workaround or stomach the changes, however unpalatable.
Land as an asset class remains a good investment and the rationale for acquiring it varies wildly from buyer to buyer. We therefore anticipate that the market will remain stable for the time being.
Heaton & Partners
The Heaton & Partners Team.
Thankfully our business has proved remarkably resilient over the last twelve months. In a sector where anyone can call themselves a buying agent, we are proud to have continued to grow our team with seasoned professionals this year. Coverage now extends further into the Westcountry with the addition of Amy Woods, whilst we also welcomed Alasdhair Lochrane to the Cotswolds as well as various other new recruits to our management and wider team.
Our business only succeeds if we continually deliver a great service to our clients as they become our greatest advocates. We are grateful for each and every recommendation we receive from our past clients and other friends of the business. It is hugely appreciated. Thank you.
