Country market vs London12 December 2017
It is no secret that the London market is difficult. Stamp duty (thank you George Osborne) has reduced turnover by about 40% since 2014 - which is disastrous for operationally geared estate agents and existential for single house developers. We have had a better time than most as a more difficult market means clients need us more than ever - but almost everything is uphill.
The country market, in strong contrast, has been busy; as busy as we have ever known it at this time of year in over 30 years - probably as busy as any time of year, in fact. Why would this be? Firstly, it is a matter of price: London is expensive by any measure and in contrast the country is relatively cheap. Until 2008, as a rule of thumb, you sold a medium sized house in Kensington and bought a nice Rectory in Hampshire. You can now buy two Rectories for the same price as the Kensington house. Secondly, the boom in London prices meant that country buyers were unwilling to make the trade through fear of never being able to buy back in London. As London prices have flatlined or declined and country prices firmed, that fear has dissipated. And thirdly, in the country, there are often ways of reducing the stamp duty burden that aren’t available in London.
In both markets there is an emphasis on quality. The best goes well, often at a premium, but the second line - road noise, pylons, pig farms - can be sticky, very sticky - and only lubricated by harsh pruning of price expectations. Sellers take some persuading on this and the current hyperactive country market may be symptom of the penny finally dropping after three years of Mexican standoff.
Next year? It may be wishful thinking but we sense a change in London: more buyers in the market - particularly from the Middle East and Asia - and a feeling that life goes on and that stamp duty is here to stay and something to be endured as a cost of living. It won’t be a bull market - but it might be better than the year we have just had.