Edward Heaton, founder and managing partner of buying agents, Heaton & Partners (www.heatonpartners.com), gives his thoughts on what’s in store for the Prime Property market this year.
A fond farewell to 2019
The threat of a Corbyn government and uncertainty over Brexit kept the Prime Central London market relatively subdued in 2019. In spite of this, we witnessed a number of international buyers who saw this as the ideal time to buy. Their reasoning was that regardless of the outcome of Brexit, once there was certainty (in or out, with or without a deal) both Sterling and house prices would start to pick up. Our London team experienced their busiest year ever as a result and we hope our clients who took the plunge will be rewarded for their confidence.
Meanwhile in the country, the acute lack of stock made for a testing market. The year started quietly, then there was a flurry of activity after the end of March where some frustrated would-be sellers decided just to get on with it. We were lucky (although we probably made a lot of our own luck) to be able to sniff out some great houses and deals for our clients over the spring and early summer. The market died again in the autumn once a general election was called. Prime country house prices remain relatively unchanged over the last twelve months.
Regardless, we had our best ever year as a firm, slightly improving on our record result in 2018. So whilst 2019 might be remembered by most as a year of political turmoil and uncertainty, for Heaton & Partners at least it was a good vintage.
The Year Ahead
Sentiment in the prime property world has been almost overwhelmingly positive following the general election, with lots of chat about a ‘Boris Bounce’. In an uncertain world certainty suddenly seems to have been restored, perhaps immediately demonstrated by the number of significant London deals that exchanged contracts to international buyers on 13th December.
Savills are predicting five-year UK house price inflation of just over 15%, but expect Prime Central London to outperform the market, with growth of more than 20%. They forecast price rises of 3% in Prime Central London in 2020, 6% in 2021 and 4% in both 2022 and 2023.
Meanwhile Knight Frank predict UK house prices are likely to rise by 2 per cent in 2020, but again by 15 per cent over the next five years. The highest five-year growth is expected in the East and South East of England where they predict prices will rise by 17 per cent.
We expect an uplift in transaction levels in Prime Central London this year, matched by a modest increase in prices, most of which will be seen in the first half of the year. The market may flatten slightly in the latter part of the year as attention will inevitably turn to ‘Deal or No Deal’.
In the country we anticipate seeing a little more prime stock, although the reality is that it would be hard for levels to get any lower. There is a lot of pent up demand which could lead to some hard battles and competitive bidding in the coming months. As ever this may translate to premiums being paid for the ‘best in class’.
A window of opportunity
The Conservative Party manifesto pledges they will help pay for the Affordable Homes Programme ‘by bringing in a stamp duty surcharge on non-UK resident buyers”. The surcharge is likely to be 3% and may be introduced in the next budget in March. The surcharge will be payable on top of the 3% surcharge that second home buyers already pay and will apply to all international buyers, including expats wishing to move home. A small window of opportunity therefore exists for international buyers to secure a property before having to pay the surcharge.
Now Boris needs to concentrate on Brexit and the UK’s international image. I would like to see Britain send a message to the world that we are open for business and looking to welcome people from around the world. We should make it an easy process to move here, encouraging both those who have something to add and the very wealthy access to Britain. Making our taxation system more attractive would, I believe, benefit the economy as a whole.
Burgeoning hotspot locations
The glitzy areas close to London were hugely popular with international buyers last year and will continue to be throughout 2020 – areas like Cobham, Esher, Ascot and Windsor. There has been a distinct lack of good houses within 1.5 hours of London in what I would describe as ‘proper countryside’. This is probably restricted to the A3, M3, M4 and M40 corridors. These will be areas to watch if supply increases.
I think the areas to look out for are situated just beyond what has historically been a normal commuting area. Especially with the electrification of the line west of London this means that some areas have suddenly become much more accessible, for example you can get from Chippenham to Paddington on the fast train in one hour. As ever, more people enjoy flexible working arrangements this enables them to push the boundaries of the commute itself. Salisbury and the villages that surround should also see a recovery having some bad publicity over the past year, with a surprisingly fast commute.