Carter Jonas
Carter Jonas

Positive times for rural residential market

Television programmes have made a wider public familiar with the mantra “location, location, location”.

It is widely assumed to apply to the position of property for sale but equally important is the location of the estate agent’s office, particularly where the market attracting buyers exiting London is concerned.

In that regard, having a sales office presence in Mayfair, where Carter Jonas has long been active, is definitely the order of the day although the wider Carter Jonas network in London also attracts sellers who are potential buyers of country homes.

Whilst early year activity from both purchasers and vendors was muted at the top end of the market, a post-election calm has resulted in a return to more natural levels of new instructions, viewings, and most importantly, transactional levels.

Due to the absence of the mansion tax threat, this pre-election trend was certainly not felt in the mid to lower end of the market, where strong demand was witnessed both before and after the General Election.

Moving into the latter part of 2015, we expect an increase in the number of families exiting the London market to boost demand. Differentials between the capital and the country markets look to have reached the peak point of this cycle, which should result in a release of pent-up demand from outward-moving London households. Values of £1m+ country houses are expected to hold firm for the coming months, beginning to rise circa 5% during 2016.

Although Land Registry figures at the end of Q1 2015 showed average annual house prices in England and Wales close to eclipsing their 2007 peak, this data is heavily skewed by

the rapid house price inflation recorded in London. 

Outside London, only two other regions, the South East and East, have surpassed their previous peak, with average values in the Northern regions still 16–24% below the highs witnessed in late 2007 / early 2008. Although less exaggerated, this geographical split can also be applied to transaction levels, where sales in Northern regions remain 29–33% below the peak market annual average, whilst this figure is just 15–17% below in Southern and Eastern areas.

It has been a fascinating first half of the year as the country adjusts to the unexpected result of the General Election and the appointment of a new government. Now, with a Conservative majority, the approach is likely to be a continuation of what we have seen over the last five years. The country should now be entering a period of market stability and expect some assertive action from the government in terms of addressing the current undersupply of new homes.

Modest private rental growth of between 0.3% and 2.0% was recorded in English regions during 2014. The good news for regional tenants was that the national average weekly wage (including bonuses) rose at 2.3% during the same period, resulting in a slight marginal increase in affordability. That being said, with tenant demand remaining steady and lenders reporting a sharp decrease in demand for buy-to-let mortgages over the previous six months, an imminent shortage of rental stock and subsequent rental rises are now a strong possibility for the end of 2015.

This could be a real positive for farming businesses that rely on letting residential properties that have become surplus as the workforce has shrunk to supplement incomes, especially at a time when world commodity values are having a severe impact on farmgate prices.

Rory O'Neill

Rory O'Neill

Partner - Head of Residential Division

Rory, who specialises in all property from apartments to country estates, has been in Marlborough since 1995.  He has over 25 years of property experience including previously working in Mayfair, ...

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