Partner, Head of Country Department
From surges in the Midlands to rebalancing in the South, we take a look 4 house price trends that are impacting the market at the moment.
We’re keeping you up to date on the latest house price trends - here are 4 to keep an eye on.
Midlands catching up
If there’s one growth area in the UK it’s the Midlands. Strutt & Parker’s Midlands’ offices have been reporting excellent figures, going against the general sense of uncertainty reported in the sector.
Places like Ludlow and Shrewsbury have been posting excellent statistics. The number of new applicants in the first 6 months of 2017 was 28% higher than the same period last year for these offices, while viewings were up 12%; new instructions up 10% and the number of sales up 16%.
There’s no one reason for rise, but many smaller ones. For example, the region has seen a steady stream of downsizers. Figures show that 70% of buyers in the Ludlow office are out-of-area buyers - nearly all of those are downsizers. Second home owners (5%) and families relocating (25%) make up the rest.
In Shrewsbury, 70% are out-of-area buyers with many of these families from London and the southeast looking for great schooling.
Gazumping makes a return
While gazumping has become common again in London, it’s now starting to rear its ugly head in the Midlands and further north.
Sam Gibson, Head of Strutt & Parker Morpeth says: “We have gone from absolutely no gazumping to some. Why? We feel there is a shortage of supply of nice houses and therefore pent up demand. When you have something very special like a house on the beach, gazumping can happen.
“There have been occasions where people - in a moment of despondency - have accepted an offer thinking it was the best they were going to get, and then someone comes along and makes them a better offer. If it’s an extra of £20,000 it can be very difficult to resist.
“Brexit and the general election period allowed for a moment of calm in the market and reduced inactivity; now that’s over we are seeing an increase in viewings and therefore offers.”
Jamie Carter, Head of Strutt & Parker Chester adds: “We are seeing gazumping happening more in 2017. If a vendor is willing to be bold and price attractively/realistically from the outsight it will generate the levels of interest necessary to obtain multiple buyers and lead to a positive result.
“We recently had a property agreed at just below the guide price to buyers in a proceedable positon - but a week later a buyer who previously viewed the property came back and offered 10% above the guide to fend off other bidders. We obviously have to report all offers to our client and be completely transparent with the decision lying solely with the sellers. We gave the original bidder a chance to increase their offer.”
Expats key to prime country market
The prime country market has been a strong one for a while. And much of its recent success has been due to the flood of expats from places like the US, China and Hong Kong taking advantage of the weak pound.
James Mackenzie, Head of our National Country House team, says: "Expats are what's keeping our market alive. Most of them are paid in US Dollars and many come from the Middle and Far East - Singapore, HK, China, Malaysia - and also a few Kenyans.
“The great thing about it is they mainly come over here in the summer when the English weather warms up or for Christmas. The two times of the year that we have the best trading months at the top end without a doubt are November to December, and July to August. That has rung true for the past 2 to 3 years.
“The last 6 houses within a 20 mile radius of Bath have all gone under offer to or sold to expats. One of our clients who has recently purchased a house in Bath has 7 friends from Hong Kong alone who have moved here and put their kids into the same school in Bath."
Rebalancing in the south
The once-booming South East market is now starting to rebalance to more realistic levels, according to Simon Backhouse, Partner at Strutt & Parker Canterbury.
He says: “Over inflated micro markets are now coming back down to real life. There are certain sectors where local agents have really talked up their market. Then along comes this hiatus and you get thrown up the air. Things have to inevitably settle down. Over inflated areas then have to realign values accordingly.
“There are some particular towns that have agents super inflating prices so seller expectations are simultaneously rising. Some agents have been lucky with one of two sales, and have made the assumption that the whole the market has moved up one or two notches.
“Seasonality plays it part. In July, phones don’t ring as often during the summer holidays. Buyers have seen the turn in the market and are hunting for a bargain, especially cash buyers who aren’t in a hurry and know they’re in a powerful position.
Fred Cook, Partner at Strutt & Parker Salisbury, adds: “Don’t underestimate buyers; they tend to be well-researched and savvy so pricing is key. The market is somewhat unpredictable at all levels, but houses priced correctly and marketed well are selling.
“The ‘upper end’ cannot be described as an ‘easy’ market - but it is simple in that there are good committed buyers out there. They are looking for good value, particularly so with both the economic and political outlooks being uncertain. Added to this are the dramatic stamp duty increase and the second home surcharge, which invariably hit buyers of this sort.