Country homes forecast to rise 10%

Published 02nd Jan 2010

Continued demand from foreign buyers will push up the price of country homes by as much as 10 per cent this year but the outlook for the property market as a whole is more mixed, according to leading estate agents.

Rob Bruce, head of research at Hamptons International, is among those tipping country homes to outstrip the market, partly because of interest from Middle Eastern and Asian buyers. He predicts that the prices of country homes will regain the peak levels seen in 1997, a feat achieved by some prime properties in London in late 2009.

There is dispute among agents and economists about whether the recovery in the broader property market will continue. Some predict that prices will increase by as much as 7 per cent in 2010, while others foresee an equally sharp fall.

A slight weakening in confidence was discerned by some agents in the final weeks of December and Lucian Cook of Savills believes that the first few months of 2010 will prove decisive. “Buyers and sellers should show their hands early in the year. The question is: will they come back from Christmas still keen to get into the market?”

Knight Frank, the agent, predicts price falls of 3 per cent this year, although it expects prime country homes to hold at current levels and a 9 per cent rise in farmland prices this year and a doubling by 2015.

Savills and Jones Lang Lasalle also forecast a setback for prices overall this year due to a weak economic recovery, the likelihood of further job losses, the continued shortage of mortgages and the risk that interest rates will soon climb from their record lows. But, as lending conditions continue to improve, agents predict a more stable 2011. Ray Boulger, of Charcol, the mortgage broker, said: “In the spring there were quite a few people who could not move because they did not have enough equity. There are a reasonable number who will be able to do so in 2010.” He tips house price increases in 2010 of 4 per cent.

The slow economic recovery may force more sales — and may dent rents, some agents warn, causing difficulty for landlords — but Mr Boulger predicts that it will mean that official interest rates end the year at their present record low of 0.5 per cent.

Such low rates are helping homeowners to meet their mortgage payments and the Royal Institution of Chartered Surveyors expects house price rises of 2 per cent, in part because there will not be enough homes coming on the market to meet demand. It believes that the number of transactions will nudge up in 2010 but remain at historically low levels.

Mr Bruce expects London to be the “epicentre for growth” this year, partly because of its appeal to foreign buyers and the weakness of sterling.

Savills is among those warning that the two-speed slowdown has renewed the North-South divide. The mainstream housing market, so dependent on jobs and borrowing, will lag in the North West, North East and Yorkshire and Humberside, as well as Scotland and Wales, the agent says.

The County Homesearch Company, a buying agent, tips Wickhambreux, near Canterbury (a beneficiary of the new high-speed train into London) and Brookwood, near Guildford and Woking, as well Henley-on-Thames and Cambridge, as areas where increased interest from buyers will push up prices. Some observers are also predicting a resurgence of the second homes market, fuelled by interest from affluent professionals with ready access to cash for deposits.

Among subduing influences on the market will be the general election.

Election may dent movers’ zeal

Mortgage funds should be more plentiful this year and the low interest rates available for savers should continue to support house prices. Investors dissatisfied with the low returns on bank deposit accounts are diverting their cash into property. But politicians may stand in the way of the revival.

General elections tend to lessen interest in moving home; this year concern about higher taxes, public sector cuts and unemployment will compound that effect.

Commentators who forecast small falls this year think that there will be more forced sellers, unable to make ends meet when discounted-rate mortgages end. Demand for these properties may be higher than expected, however. Many households are itching to move up the ladder. They have more equity in their homes thanks to the recovery and — as long as they can match the banks’ exacting criteria — they could find it less tricky to get a loan.

Again, this demand will be most keen in London and the South East, where homes took only three to five weeks to sell last year, according to Hometrack, the housing data group. In Manchester, Lincolnshire, Merseyside and Wales the average was 14 weeks.

This year cash-rich buyers will chase homes in the locations where prices are at or near their 2007 levels. That should ensure the fortunes of prestige homes in London and areas such as Oxford, Cambridge and Harrogate which have such advantages as green spaces, good schools and period family houses.

Elsewhere, the prospects are more uncertain. Homeowners in these places will be looking to whoever wins the general election for more affordable borrowing and easier access to the housing market for first-time buyers.

Source: ' Times '

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