09 Dec Prime property sales outside of London benefits from ripple effect
The number of properties in England and Wales which are worth £1 million or more and located outside of London has increased by 38% over the last year, new research shows.
Using sales data from the Land Registry and price performance at a local authority level over the year to September 2014, real estate firm Knight Frank has identified the areas where the largest number of property millionaires have been created over the last 12 months.
The biggest growth, in terms of households, has been in markets on the outskirts of the capital such as Elmbridge, Guildford and Windsor and Maidenhead.
These markets have been the biggest beneficiaries of price growth rippling out from central London, while rising demand for family homes from both Londoners looking to move out of the capital and buyers wishing to trade up in the local area has helped to boost property values.
The UK’s economic resurgence over the last year, which has played its part in boosting buyer’s confidence, together with increased activity in the mainstream property market have also been factors, the report suggests..
The data also shows that the number of properties sold for £1 million or more outside of London during the first six months of 2014 was 44% higher than the corresponding period last year.
Overall country house prices have risen in value by 5.6% since the market low in 2009 and currently sit 16% below the previous peak. In contrast, in prime central London prices have grown by 74% and are 32% above their previous peak, making the country good value for those wishing to trade up and out.
In the Midlands and Wales the number of £1 million plus sales over the year to June 2014 rose by 78% year on year, while in the north, where the housing market recovery since the downturn has been slowest, the number of sales in this sector was 24% higher compared to the previous year.
However, in terms of the number of sales, the bulk of prime activity during the first half of 2014 was concentrated on southern England and the Home Counties with the majority located around the transport corridors of the M3, M4 and the M40. These markets benefit from their proximity to London and excellent transport links back to the capital, good schools and local amenities.
Agents report that demand has been bolstered by an increase in the number of buyers looking to take advantage of the gap between urban and rural values, particularly those moving from London. Prime prices in the country look good value on a historical basis having experienced several years of static or modest growth since the end of the financial crisis.
But while the number of property millionaires in England and Wales may be rising, it is worth noting that the number of homes worth over a million pounds outside of London still only accounts for less than 1% of the total housing stock.
‘These increases confirm the long held belief that property in the South East of England within commutable range of the capital and close to first class schools are selling well,’ said Rupert Sweeting, head of Knight Frank Country.
‘The ripples from the buoyant London housing market together with increased activity at the lower end of the market are helping to push prices and activity from the bottom up. There is no doubt that the continued low interest rates combined with very attractive mortgage offers are also the catalyst for this,’ he added.
But there are signs that the momentum seen in the first half of the year is easing. Uncertainty over the outcome of the general election, an impending interest rate rise, tighter mortgage lending and ongoing talk of mansion tax have all cooled demand
In Scotland, the report says that the recent No vote in the independence referendum has created a more certain environment for the property market to function. The number of sales completed across Scotland following the referendum in September and October was 63% higher than during the two month period running up to the vote.
While activity has picked up, the introduction of a new Land and Buildings Transaction Tax (LBTT) to replace Stamp Duty in April next year could have the unintended consequence of stalling the market’s recovery, the report points out.
‘There is fear in the market over LBTT but despite this we are negotiating deals at all levels. Prior to the introduction of the new levy in April, we expect to see an increase in the number of prime sales and homes coming to the market as both buyers and vendors look to move before costs rise,’ said Ran Morgan, head of Knight Frank Scotland.