This article by Patrick Gower of Bloomberg on October 14th, 2013 reveals how wealthy left London to be living in a country life when house prices rise.
It took more than a year for Mark
Hudson to find his six-bedroom home in the English countryside.
Within weeks of moving in, he got a bid that topped the 1.75
million pounds ($2.8 million) the property cost.
“Somebody called offering a significantly higher sum,”
said Hudson, a 55-year-old manager at a publishing company, who
in August swapped his home in Clapham, a
London district favored
by young bankers and lawyers, for Dorset, the farm-dotted county
125 miles (202 kilometers) southwest of London that was the
setting for Thomas Hardy’s Tess of the D’Urbervilles. “It looks
like we caught it just at the right time,” he said.
Country homes are coming back into fashion, after lagging
behind urban locations such as London’s West End since the 2007
financial crisis when banks cut off mortgages. Prices for manor
houses, farmhouses and cottages valued at more than 750,000
pounds climbed at the fastest rate in more than three years in
the third quarter, Knight Frank LLP said in a report today, as
Prime Minister
David Cameron makes reviving the housing market
central to his efforts to pull the economy out of recession.
“It’s U.K. economic growth and broader housing-market
confidence,” said
Liam Bailey, global head of residential
research at the London-based property broker.
The government last week introduced the second phase of its
Help to Buy program, which offers mortgage guarantees that allow
purchases with down payments as low as 5 percent. The first
phase, which began in April, provided interest-free loans for
buyers of newly built homes. The program has contributed to the
strongest housing market since the financial crisis, even as two
thirds of 31 economists surveyed by Bloomberg described it as
“bad” policy.
Bigger Appetite
“Help to Buy has obviously been a catalyst that has
encouraged people,” Bailey said by phone. “It’s stimulated
appetite to get into the market and that’s not only the lower-end first-time buyers -- it’s right through into the prime
sector.”
In July, homebuyers took out 3,900 loans of 500,000 pounds
or more, the most since September 2007, according to the
Council
of Mortgage Lenders. There’s also more willingness to lend at
higher loan-to-value ratios, according to Henry Knight, managing
director at mortgage broker
Springtide Capital Ltd.
Two years ago,
Barclays Plc (BARC)’s Woolwich unit,
Nationwide
Building Society and
Lloyds Banking Group Plc (LLOY)’s Halifax
“stopped agreeing mortgages for more than about 1 million
pounds, but now they’ve moved up to 2 million pounds and some
have gone to 3 million,” Knight said by phone. “There are just
more lenders playing in that market now.”
Prime Country
Knight Frank’s prime country-house index, based on data
from the firm’s U.K. branches, shows that prices rose 0.8
percent in the third quarter from the previous three months.
Gains were led by Virginia Water, Berkhamsted and Cobham, just
outside London. Prices climbed 0.4 percent on an annual basis.
The measure includes manor houses, defined by
Knight Frank
as a large property standing in extensive grounds; farmhouses,
which typically have six bedrooms and several acres of land
including garden, paddock and barns; and cottages, which
normally have four bedrooms and about an acre of land.
While demand for properties within commuting distance of
London was strongest, prime country homes in every region of
England climbed for the first time in two-and-a-half years
during the quarter, according to a reported published by
Savills
Plc (SVS) last week.
“This is your last chance to buy before stock goes down
and prices really start to rise,” Yolande Barnes, director of
residential research at the London-based broker, said by phone.
Queen’s Castle
Current offerings of theirs include
Park Place, an eight-bedroom period house on the edge of Windsor Great Park with
cottages and stables on about 15 acres. The property, about an
hour’s walk from Queen Elizabeth II’s Windsor Castle and close
to English private school Eton College, is priced at 20 million
pounds.
Savills, along with Hamptons International, is also selling
Bayfields Farm, a country house in Hampshire, about 30 miles
from Highclere Castle, where TV show “Downton Abbey” is
filmed, for 2 million pounds.
The value of U.K. luxury homes had plunged in the wake of
the 2008 collapse of Lehman Brothers Holdings Inc. and the
ensuing credit freeze and recession. Average prices of homes in
London’s most expensive neighborhoods fell 25 percent in 2008,
while those in the countryside fell 20 percent, Knight Frank’s
Bailey said.
Mortgages of more than 500,000 pounds to home buyers
dropped by almost 50 percent between 2007 and 2008, according to
the
Council of Mortgage Lenders.
Affluent Foreigners
London’s property market began to recover in 2009, in part
because of affluent foreigners seeking a haven from turmoil in
the
Middle East and the wider
European debt crisis.
These buyers, attracted by mansions a short walk from
Harrods and
Buckingham Palace, helped push the price of luxury
homes in central London up 23 percent since their last peak in
Autumn 2007. Prices of prime country homes remain down 20
percent, according to Knight Frank.
Now the recovery is spreading beyond London. The number of
homes sold in the U.K. reached the most in nearly four years in
July, according to the
Royal Institute of Chartered Surveyors.
That helped push the value of prime country homes up for the
third consecutive quarter, Knight Frank said.
House prices in
affluent areas about an hour from London climbed 1.6 percent
during the three months, while those in the remainder of the
south of England climbed 1.2 percent, according to Savills.
Homebuilders Rise
U.K.’s homebuilders have been among the biggest
beneficiaries of revived housing demand, with an index of the
companies gaining 47 percent this year, compared with the 10
percent advance for the FTSE 100 Index.
Persimmon Plc (PSN), the
largest U.K. builder by market value, rose the most in almost
two months on Oct. 9 after
Goldman Sachs Group Inc. (GS) said the
stock may increase by 70 percent within six months.
Homebuilders are increasing productivity to satisfy new
demand, which may be a mixed blessing for country estates.
“Prices are moving up against a background of four years
of low supply in the country-house market,” Bailey said. “If
this positive sentiment pulls in more supply, that will hang a
question mark over the sustainability of this growth.”
For Hudson, waiting to sell his London home proved
fortunate as prices rose in the capital, while he said they fell
last year where he was looking.
“You’d see a house listed and a few months later it would
still be on the market and the price had dropped,” Hudson said.
“When we finally bought it was more of a lifestyle choice, we
were never sure it was going to be a good investment.”
After selling the home in Clapham for 1.3 million pounds,
with an extra 475,000 pounds he could afford the six-bedroom
country house with a cottage, swimming pool and eight acres of
land.
“I had a feeling the time was right and London’s housing
market was coming to a peak,” he said. “Maybe I was wrong on
that point, because in fact that peak seems to go on getting
higher and higher.”
Article Source: http://www.bloomberg.com/news/2013-10-13/london-wealthy-leave-for-country-life-as-prices-rise.html
UK-based
Intu Properties (ITU) continues to see signs of recovery in the UK
economy with a series of positive retail sales figures and improved
consumer sentiment‚ the JSE-listed property 
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