Across all our regions and all price bands, we see a shortage of country houses coming to the market in 2017. As buying agents, we’re in the lucky position of finding out early which houses are due to be launched in the coming months so have a privileged long-view of the market. The “tip offs” come from different directions: our trusted relationships with the selling agents, previous clients who’ve let us know if they or friends are on the move or from connections that we’ve built up both professionally and personally throughout years of living in our patches. We are also lucky to benefit from the extensive contacts that also come from our parent company, Knight Frank. But this spring, feedback from everywhere is that very little in the way of stock is waiting in the pipeline—and that is concerning.
There are several reasons why this is likely to be the case. Firstly, the recent increases in Stamp Duty (SDLT) has forced everyone to re-think their reasons for moving as the buying costs have risen exponentially. If you’re sitting on a house worth between £1m and £2m, you’re questioning whether now is the right moment to upgrade. Yes, interest rates are historically low so it makes sense to borrow money but with so few houses coming to the market, there isn’t enough to tempt these vendors to get on and move. Additionally, in these times of political and economic uncertainty with Brexit, bricks and mortar are perceived as a safe place to keep money having performed well over the years in terms of capital growth. The easiest thing to do in such circumstances is to stay put and with interest rates unlikely to change dramatically there’s no need to do otherwise.
The market for us has also changed. We had a really amazing run of over 10 years when the premium country-house market within a 2-hour radius of London really motored. As soon as we found out that someone living in a nice house was in the market to move, we were there and doing deals which, in some cases, resulted in buyers paying substantial premiums for the best-in-class properties as there was plenty of competition waiting in the wings. In a strong country market, this was something buyers were prepared to do in order to secure something really special. But this was during a time of big bonuses, too. Today, people aren’t paid in the same way and are therefore more cautious about how they spend their money. The result is two-fold: it focuses more interest on supply in the price bracket of £1m to £2.5m and, as vendors were encouraged to bring their houses to the market earlier than perhaps they envisaged, anything that might have been sold this year or next, has already gone.
There are, of course, variations across our regions. Supply levels tend to be better to the south of the M4 than the Cotswolds—particularly the commuter-friendly counties of West Berkshire, Hampshire and Wiltshire where there is a more transient marketplace and a higher number of the much-desired classic Georgian-era houses. Even the more populated parts of the Home Counties are facing a shortage especially in the hotspots like Henley-on-Thames and Guildford. The one motivation which is driving vendors to the market is what we call the “fourth D” of downsizers–who come after death, debt, divorce as the main reasons that houses are put up for sale. Parents who are looking to help children or grandchildren or couples simply deciding a house has got too big for them will be the main source of supply in 2017. However, downsizers often want to sell privately, too, as they’ll want to secure their next house before they let go of their current home. And this is a market segment that’s difficult to predict as it’s very reactive: as soon as the perfect village house with a shop and pub within walking distance is launched, they’ll want to sell quickly. However, if they lose it they may not get another opportunity for another year or so won’t want the publicity of an open market sale.
It’s here where we as buying agents can help smooth the process. We never forget clients, houses and rumours of potential sales. I’m buying something at the moment which I first saw 3 years ago off market. The vendors had failed to secure a house that they liked so they decided to remain where they were. Now we’ve made an approach on behalf of our client and a deal has been done off market. Life’s gone by and the vendors have definitely realised now is the time to downsize and happy to commit to a sale with the flexibility of a delayed completion date. This is indicative of how business is likely to be done certainly for the first half of this year.
Lack of supply in ‘Best-in-class’ also means that premiums will continue to be paid for these properties especially in commutable areas with quality schooling as there is a pent-up demand. We are, therefore, warning clients that, despite what they read in the press, the prime markets in which we operate are still very competitive–especially if a property is realistically priced. Being pro-active is therefore a necessity and this means going off-market.