22 March 2023

Forty years in business – what's changed?

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Forty years is a chunk of time; at least one generation and possibly more, depending on how you count it.

Long enough anyway to see a lot of changes – but perhaps not as many as the changes in technology in particular, would suggest.
Over that time property prices have gone up about 10x in value but inflation has been just over 300% – so in real terms prices are nearly 3x more expensive now than in 1983. If anyone doubts the role of interest rates in property prices, the base rate in 1983 was around 10.5%.

It has been a remarkably steady upward trend with only one major blip between 1988 and 1992 when a recession (defined as when you, or your friends, lose their jobs) met the debacle at Lloyds that defenestrated the upper-middle classes and produced the only time in 40 years when supply of good houses increased at the same point that demand fell. There have been plenty of other moments when the market paused – the Asian Crisis, the Tech crash of the millennium, the GFC and, of course, Covid – but progress has been steadily upwards. One of the effects of this has been that the cost of repairs, as a proportion of total capital costs, has become less and less: £50k for a new roof was a dealbreaker when the house was worth £250k.

London has always been an international city – but that went into overdrive with the advent of the ‘Big Bang’ in the mid-1980s. The City – and, of course, Canary Wharf – was the fount of demand, for both London and the country – and it also shaped where people wanted to be in the country. For commuters (no WFH then) a line running from Oxford down to Winchester was the outside limit and places that are now so popular, like Bruton, were considered to be (if they were thought about at all) the boondocks. The internet changed everything – firstly enabling even the hardest charging investment banker to extend their weekend by a day, and then, after Covid, with Zoom making the office a minority sport. This has completely changed the country house market with hot money now chasing good houses from Cornwall to Yorkshire. Prices are still higher in the old commuter areas but the price differential is now minimal rather than substantial. Rather in the same way that the flight time to New York has lengthened rather than shrunk over forty years, the driving times to get round the country have extended – even though the M25 wasn’t built then. Most of the other main arteries were in use, but the number of vehicles on the roads has almost doubled – with predictable results.

The ability to work from home has trumped the extra journey times.

In London, these newly arrived international buyers were not that impressed by the standard tall and thin London house – that was also probably a depreciating leasehold – or by a Victorian mansion block that smelt of cabbage and cigarettes. The Leasehold Reform Act of 1993 bought London into line with other world cities in giving real capital security and it is no coincidence that the real transformation of the London skyline and existing stock of flats got really going about this time. And that has been some change, as a trip down the river from Putney to Greenwich will attest. Less obvious from the outside is the number of Victorian and Edwardian buildings that look the same as before but now have an interior that is a completely new building. With houses, the differential between property prices and building costs has spawned a rash of basements and vertical extensions that would have made no sense when the price of an old building was a lot less than construction costs. Those costs have rocketed recently, but are still well short of the price of existing stock. On the same theme, country houses, in retrospect, were very cheap in the mid-1980s meaning that even if you could get planning permission (more difficult then) the cost of building a new house was only for those that didn’t have to worry about the value of it.

The property market itself has changed considerably – but not as much as the internet would suggest. A leitmotif running through commentary since the advent of the internet is that agents would be disintermediated – a long word for becoming redundant. Photos, videos and drones have replaced stick-on photographs and typed up details, but the market is substantively the same, with similar commissions – and people, though the latter have become rather less tweedy.

Portals have put more power into the hands of buyers, but they exist alongside estate agents rather than in place of them – as a walk down any high street will illustrate. Walk-round videos – ones that the viewer can control – are now more common – but there remains today, as there was forty years ago, a visceral rather than logical resistance from sellers on the grounds of security. A big difference is in the number of buying agents. Property Vision was a rare beast in the property jungle in the mid- 80s. Not so now where there are numerous independent buying agents, the buying arms of the larger estate agencies and a plethora of kitchen-table offerings competing in what remains an unregulated market with low barriers to entry.

Has Property Vision changed much? In 1983 we were two men and no dog – we couldn’t afford one. Now we are thirty six – big enough to have heft and coverage but still working and thinking as partners. Then we were focused on the country market but now we cover London, rentals and key international markets through carefully chosen partners. When we started, we believed that there was a fundamental difference between buying and selling and the advice required. We still think that. One thing has changed. We thought back then that we were a property business – but what we learned is that we are ultimately a service business – that happens to specialise in property. This may sound like semantics but what we try to do is not to compare ourselves with property companies, but to learn from, and imitate, the very best service companies in the world. If we continue to do that, we believe that, however much things change – and they will – we can continue to be the very best at what we do.

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