The country property market set off at a gallop in the past three weeks. With the spectre of a hung Parliament safely removed and the new Government firmly in the saddle, both buyers and sellers are swiftly starting to take the plunge.
“Those previously delaying a move are now making positive noises,” says Justin Lowe of Greenslade Taylor Hunt in Somerset, who hopes that the electoral result will finally bring more rural property to the market , which “appears to be running at about 10-15% lower on supply than in the past.”
Similarly, William Grant of country agents Fox Grant, who cover Wiltshire, Somerset, Dorset and The Three Counties, reports that the market is “even more active” than at the beginning of the year, with property selling well because stock is short.
The top price brackets are especially buzzy now that the mansion tax has vanished from the horizon, according to Diana Andrews of Churchill Country & Equestrian in West Sussex. “High value properties no longer have the glass ceiling on capital.”
Prime country homes, in particular, look set to benefit more than London ones from this newfound optimism. “Prime London markets were looking much more fully priced than those in and beyond the commuter zone, and will have to operate in a relatively high tax environment given stamp duty increases imposed in December 2014,” explains Lucian Cook, head of Savills residential research.
Consequently, he adds, “it is in prime markets outside London where we expect to see the greatest value increase. Improvements in the London market are likely to be sufficient to trigger a renewed ripple effect into the markets beyond the capital, as those relocating from London find it easier to sell their existing home and take advantage of the price differentials with the rest of the country.”
Cook and his team expect a steady growth to the tune of 22.7% in prime London and 23.9% across the prime regions by 2020. The mainstream housing market, which still faces the double constraints of restricted access to mortgages and a potential rise in interest rates in the future, is expected to grow a little less—Cook quotes an average increase of 19.3% across the UK by 2020.
The prospects for farmland look equally strong now that the electoral lull is over. “Before the General Election, the land market was proving to be very resilient, with prices being paid between £10,000 – £15,000 per acre for arable land, depending on location and other factors,” says Mark Lawson, a property search agent specialising in residential and rural estates at The Buying Solution. “We don’t see any change following the election—indeed, there seems to be particular demand for the larger blocks of well-equipped land, particularly without a large house.”
Lately, the combination of poor commodity prices and the strong pounds has reduced return on agricultural land but Lawson believes demand will remain high: “There are no envisaged detrimental tax changes and the world population is growing, as is the continued preference for Western-style foods.”
However, these downward pressures may deepen the price divide within the land market, according to Ian Bailey, who heads up the rural research team at Savills.
“We expect further growth in national farmland values in 2015 but a clear understanding of local market conditions will be critical to both buyers and sellers to ensure expectations are realistic,” he says. “We believe that, in certain segments of the market, growth may be zero or at best very weak. This will be for poorer quality land, where local supply outstrips weak local demand.”
Bailey expects prices for top quality farmland to rise by 47% in the next five years, against 30% for average land and a more meagre 11% for poor quality plots.