London Wealthy Leave for Country Life as Prices Rise

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

England and Wales House Prices Up 1% in July

According to the latest data from the Office of National Statistics, house prices in England and Wales increased by 1% in July, taking the average house price to £164,098 as shown in this August 29th, 2013 article by the Property Wire.


The region in England and Wales which experienced the greatest increase in its average property value over the last 12 months is London with a movement of 6.3%. The average price of property in the capital is £385,799 in comparison with the average for England and Wales of £164,098.

In London the borough with the highest annual price rise is Lambeth, with an increase of 11.4% while Islington experienced the highest monthly increase, up 2.3%. Newham saw the least significant annual growth at 0.7% and Barking and Dagenham saw the greatest monthly price fall, down 1.5%.

Both London and the Midlands experienced the greatest monthly rise with an increase of 2.1%, while the North East also saw the most significant monthly price fall with a decrease of 0.5%.

The metropolitan district with the largest annual price increase is Birmingham, rising by 2.6% and Rochdale experienced the highest monthly price rise, with an increase of 2.2%.
Sandwell saw the most significant annual price fall, down 6.1% and Sandwell also saw the greatest monthly price fall with a decline in prices of 2.1%.

But on a monthly basis the Isle of Anglesey experienced the strongest monthly growth with an increase of 2.9% while Blaenau Gwent saw the most significant monthly price fall with a drop of 5.9%.

The most up to date figures available show that during May 2013, the number of completed house sales in England and Wales increased by 19% to 62,651 compared with 52,516 in May 2012.

The figures also show that number of properties sold in England and Wales for over £1 million in May 2013 increased by 28% to 740 from 576 in May 2012.

The region with the greatest fall in the number of repossession sales was Yorkshire and the Humber where repossessions dropped by 32% in May 2013 compared to the previous year.
Overall repossession volumes decreased by 23% in May 2013 to 1,365 compared with 1,765 in May 2012.

Paul Smith, chief executive officver of haart estate agent, said that the figures shows that the pace of the property market is up and now is a good time to sell.

'Mark Carney, Governor of the Bank of England, has quelled fears that we are sitting on a volatile property bubble, by indicating that the Bank is ready with a plethora of tools to guard against such a scenario. His additional signal that interest rates are likely to remain the same until late 2016 injects further confidence into the rapidly recovering property market, with lenders able to offer highly advantageous deals for those seeking to step onto the property ladder,' he explained.

'Today’s Land Registry House Price Index shows that property prices are continuing to rise across the UK due in part to the increase in sales transactions which are up 19% annually in May 2013. While demand is very high, our market monitor this month indicated that new buyers across the UK are up 28%, and the majority of people have not cottoned on to the fact that the economy, and the property market, are looking incredibly rosy now is the time to sell now before everyone else does,' he added.

David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains, said that a splurge of sales, married to a painful lack of supply of homes, is driving up house prices at a rate of knots.

‘It has been a staggeringly quick improvement over the last 12 months, and is underpinning the wider economic recovery. Getting a mortgage is significantly easier than it was in 2012, and this has opened the door to thousands more first time buyers. Rates are cheaper, choice is wider, and criteria are less stringent, which has triggered a mortgage boom,’ he explained.

‘It has allowed more new buyers to realise their dreams of home ownership, which were a very distant prospect several years ago. In the long term, the government needs to do more to ensure the improvements in the housing market are sustainable,’ he added.

He also pointed out that if prices continue to rocket, it will freeze the next wave of first time buyers out the market and dash dreams of home ownership for buyers who can’t wield a big deposit. ‘More homes need to be built if supply is to keep pace with demand. An equilibrium between supply and demand should be the basis of a responsible and sustainable housing market.

There is currently a pitiful shortfall in housing starts. Planning restrictions need to be eased and the government needs to do more to help developers,’ he concluded.

According to Paul Hunt, managing director of Phoebus Software the housing market is proving to be resilient with underlying demand supporting house prices in London and the East Midlands in particular.

‘The catalyst for all this has been significant improvement in mortgage availability, and this is making life much easier for first time buyers. Mortgage lenders have thrown a lifeline to high LTV buyers by bringing in a range of cheap and more accessible deals onto the market, and this has sent a flurry of first time buyers flowing into the market,’ he said.

‘Lenders have been vital in their innovative approach, supporting potential buyers, while schemes like Funding for Lending have acted as a major helping hand for the mortgage market and made it markedly stronger. The months ahead look set to be slightly easier for mortgage lenders, thanks to the government’s support which should help improve the availability of finance for house purchases and help boost sales figures,’ he added.

Article Source: http://www.propertywire.com/news/europe/england-wales-property-prices-201308298174.html