It may be easier to sell your house in the year ahead than at any time in the past six years. As transactions increase and the “ripple effect” starts to move out of London, more people are likely to take advantage of it.
It may be easier to sell your house in the year ahead than at any time in the past six years. As transactions increase and the “ripple effect” starts to move out of London, more people are likely to take advantage of it. The property market is, however, full of fault lines. It is hard for first-timers to buy, second-steppers feel trapped and affordability may not improve until wages increase.
Laura Fennell and her partner Alison Richards put their house on the market exactly a year ago. They built it themselves in 1999, on an old orchard next to a marina on the Grand Union Canal at Cheddington in Buckinghamshire. Now, with good reason, they believe that market conditions have improved enough for them to sell it. After 12 months in the doldrums, Cedarwood House is attracting viewings and offers.
Their creation is extraordinary in its simplicity, a barnlike structure with a first-floor veranda sweeping along one side, overlooking the canal, their boat, the swans and the ducks. It won a Royal Institute of British Architects award in the “spirit of ingenuity” category, cost £285,000 to build (including the price of the land), and they gave up their jobs to do it. You may well wonder why the house is now on the market with Fine & Country (020 7409 4673) at £695,000.
Living beside the water wasn’t enough. Laura and Alison want to launch themselves on to the water. They are shedding their stake in the property market to spend the next two years or so roaming the canals in a 62ft narrow boat called Large Marge. “We won’t have to make decisions. It will be straight on all the way,” says Laura. They will watch the water voles along the muddy banks, potter through huge landscapes, wobble over aqueducts, see the industrial backside of great cities and peep into thousands of back gardens.
“We are just on the coat-tails of the golden generation which benefited from repeated housing booms,” says Laura. “But we don’t want a lot of material things. We want to enjoy the time we have got. When you have to remember to get water and think about what to do with your waste, you are closer to the basics of life.” The year ahead for them is full of promise, and it could be for many others too.
CATCH RISING PRICES
The forecasts keep being revised upwards. The Office of Budget Responsibility has adjusted its predictions of five-year house-price growth to 2018 from 15 per cent to 27 per cent, while Knight Frank has set it at a more restrained 24 per cent. More important to anyone selling is the forecast that transactions will rise by 12 per cent for each of the next two years. Things should get easier.
And for once it isn’t just London that will see prices rising. LSL, which owns Your Move and Reeds Rains, reported rises for the first time in three years in all regions. The highest was 26 per cent in three months in East Anglia.
The question everyone keeps asking is whether there is a price bubble developing? Apparently the increased activity isn’t enough to cause concern. “Transactions, which are a better index than prices, are well down on pre-crisis levels,” says Mark Hayward, head of the National Association of Estate Agents. “And recent price increases are small in comparison to the rapid rises seen before the financial crash. Inevitably, prices in London and the South East may heat up, but in the rest of Britain the revival is likely to be much more tepid.”
RENT OR GET ON THE FIRST RUNG?
Renters in London routinely experience what Cluttons identifies as “house price anxiety” with 35 per cent of tenants in zones one and two worrying about whether they will ever get on the ladder. Marsh & Parsons has proved their fears are justified – it reports that the price of a one-bedroom flat in a prime London zone has gone up by £60,000 in a year. The Help to Buy scheme will support some into ownership but buyers need to be aware that interest rates could rise, which would make repayments difficult.
Research by Hamptons International shows a trend of house movers getting on the ladder by moving out of the capital, but by no more than 20 to 30 miles. Its report shows that around 27 per cent of all moves out of London are made by those in the 30 to 40-year group, with a spike among 32-year-olds. “In the last three months the number of London buyers registering with our country offices has increased by 12 per cent,” says Marc Goldberg, head of sales at Hamptons.
BUY A NEW HOME
More new homes are being built. The National House Building Council says 24 per cent more were registered in the autumn compared with last year, and the Government promise of £1 billion to unlock stalled developments should bring more to the market.
Fanon Bokoko, 35, and Nikolett Varga, 28, have just bought a flat in a development called Renaissance by Barratt in Lewisham. They paid £210,000, putting down a £10,500 deposit and getting a 95 per cent mortgage with the Help to Buy scheme. “A contemporary apartment and a valuable investment,” says Fanon.
IS THE INTERNATIONAL SPENDING SPREE OVER?
Now that foreign buyers finally have to pay Capital Gains Tax when they sell their London purchases, they might think twice about selling at all. But it won’t put them off buying because they will only incur the tax on gains made after April 2015. Foreigners make up 28 per cent of buyers in prime London areas and London will continue to be a leading global market.
“This is the least worst outcome for prime London and means that there will be no mass sell-off as foreigners crystallise past gains, and little incentive to exit,” says Lucian Cook of Savills Research.
JUMP FROM THE CITY TO THE COUNTRY
“The gap between the price of luxury homes in central London and the country is at its widest in several decades,” says Oliver Knight of Knight Frank. “A country property valued at £1 million in late 2007 is now worth £800,000. A London home worth £1 million in 2007 has increased by £230,000 over the same period.