We estimate that prime country house prices in the home counties remain between 20% and 25% higher than since the start of the first lockdown in 2020.
Whilst there remains an acute lack of stock, much of the froth has now come out of the market and buyers are generally more measured in their approach, especially with regard to values. In 2022 we saw too many examples of extremely ambitious pricing and for the most part sellers went unrewarded for this. Indeed, overpricing often results in a house ultimately selling for less than it might have done with a sensible pricing strategy from the outset. Our old adage stands that if a house is still available on the property portals a couple of weeks after launch then there is either something wrong with it or the pricing is unrealistic.
An assortment of contradictions make it very difficult to predict what is likely to happen in the prime country market this year. We are expected to go into recession, mortgage rates are rising and there is a wider cost of living crisis. This will doubtless impact on the mainstream housing market with prices widely expected to fall. Historically this would have had an impact on the prime country market and there must be a general expectation that prime country prices will drop off during the coming year.
Notwithstanding we can’t ignore the absence of quality stock and the sheer amount of cash looking for a home, not an investment. Many would be buyers remain keen to get on with their lives, willing to take a long-term view of the market. On balance then we think the best-in-class houses in the £2m – £6m bracket will remain most robust, especially in counties such as West Sussex, Hampshire, Wiltshire, West Berkshire and the commutable parts of Gloucestershire and Oxfordshire. This is a market with a healthy proportion of buyers seeking a main home, yet less driven by those who need to take debt.
In previous recessions it is discretionary buyers, especially those looking at north of £10m, who have tended to exercise most caution. This has impacted most on areas most popular with weekenders and second homeowners such as the Cotswolds and the West Country. It is probably this area that is most difficult to predict in the coming year.
FARMS & ESTATES
Renewed confidence in farming has seen demand for farms and estates increase over the last couple of years with annual growth in 2022 running at close to 10% (or more according to some commentators).
Average prices in the south of England are now about £10,000 per acre for arable and £8,000 – £8,500 per acre for pasture. This obviously disregards special and lifestyle buyers who make up a significant proportion of buyers, especially in the south east.
A sustained lack of supply of farms and estates with a strong residential bias is likely to continue in 2023 with land prices widely expected to continue creeping up. It feels like there is a near drought of good residential and sporting estates in the south of England right now.
Prices in Prime Central London (PCL) have crept up over the last twelve months as the number of international buyers have swelled.
Many clients have been attracted by a weak pound coupled with UK property being seen as a safe haven in uncertain economic and political times globally. Interestingly many also express confidence in the UK economy long term, with some particularly bearish views about our European neighbours.
The Middle East has been fuelling much of this interest, although enquiries are coming in from around the world, even from some non-sanctioned Russians (albeit already living here in the UK). As with the mainstream market, there has to be an expectation that prices will come off very slightly this year in PCL, yet if we avoid a deep recession and start to see signs of a recovery by the autumn then this may yet prove to be misplaced.