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Tales from the Front Line

Nick Ashe

The market feels fragile at the moment. At the bottom of the mainstream market we hear of over supply (one local agent in Salisbury said he had more for sale now than at any time in the past 25 years) and fewer buyers registering.

In our market, the top end prime, we have more potential clients who have to sell before they employ us. Few people are prepared to buy first and risk a bridging loan. One of the main selling agents has more property for sale over £5 million than in 2008 and 2009 combined and a stagnant list of applicants. The same agent mentioned last week that very little is selling over £6 million.

But, one or two houses are attracting competition and selling for 2007 prices and above. These are prime, and are pretty bullet-proof trophy assets. The best long-term investment.

The thing is whether the purchase is discretionary or not. If you have sold in London and your children are starting school in Winchester or Oxford in September, you have to find a house. Whereas a holiday home in the West Country or a country estate is discretionary and it may be cheaper tomorrow.

Nick Ashe

I looked at a house in Hampshire this week, with beautiful views to the south over farmland with hills and woods in the distance. The boundary on the south side of the house was quite close with the view beyond. The neighbouring farmer had recently planted a small wood the entire length of the southern boundary to this house which was enclosed by a seven foot high post and wire fence. In three or four years time the view from the ground floor of the house will have disappeared. It is unlikely that anyone will want to buy the house without negotiating with the farmer to remove the trees and accept a covenant against replanting in the future. For this I was told that the farmer would want £150,000, which represents around 15% of the value of the property!

Clearly the present owners of the house and the farmer were not the best of friends and have fallen out. I have no idea what the dispute was about or who was at fault but this extraordinary and unreasonable behaviour is apparently perfectly legal. In law, you are not entitled to a view.

If you don't have the opportunity or budget to own enough land around you to avoid this sort of dispute, don't fall out with your neighbour or you may end up with an un-saleable asset!

Nick Ashe

We haven’t seen much agricultural land change hands so far this year but I think this is one asset class which is considered a safe haven for lifestyle buyers and investors this year and is likely to appreciate in value as a result.

Depending on the research you choose to read, the value of agricultural land at the moment is between £5,500 and £7,000 per acre. There are a number of drivers which will increase demand and value. Savills reported last month they had over £7 billion worth of investment money chasing agricultural land. Strutt and Parker have reported a similar demand from investors. The demand from residential and lifestyle buyers has increased over the past 6 months with a number of UK city-based buyers talking to us about good quality period houses with 500 to 2,000 acres, the majority wanting the land for sport, shooting, riding, walking, privacy and protection. International buyers still view the UK as good value with a weak pound against many other currencies. The value of land in parts of Scandinavia is over £10,000 per acre and in Ireland where the economy is on its knees agricultural land has fallen from a peak of £20,000 an acre to £10,000; still considerably higher than over here. The market is nervous with prospects of an uncertain election result and a potential hung parliament. The bears in the financial markets are again talking of a double dip later in the year.

I think agricultural land will be seen as a safe asset. Supply is likely to be an issue. Farmers and land owners tend to sell only as a last result and hold on to their land for generations. If all these factors are true the only way is up!

Nick Ashe

The country market is very seasonal in December, with most people thinking about Christmas and entertaining their children rather than buying or selling houses. 2010 is looking a bit more interesting. Usually we hear at this time of year that agents are looking at a trickle of properties for next year. But actually the supply is looking a bit more exciting with a good number of agents reporting that they have instructions to sell some good quality properties in January and February.

Traditionally the selling agents are looking for excuses to advise vendors to sell in January/February as they have nothing else to do and no stock and the clarion cry is there is nothing else to compete with you and there are good buyers around so why not sell early. Actually there are some good reasons this year to accept the advice to sell in the middle of winter. We have seen a poor supply (down by about 40%) of good quality country property this year and with slightly better economic news, the number of buyers has increased significantly in the last quarter of 2009. So not much supply, some pent up demand, an election looming and uncertain economic news ahead (one commentator predicted the economic graph for 2010 as being corrugated iron shaped), all support the advice to sell early.

Is it a good time to buy? If you can find what you want early in the year buy it because I do not think there will be a strong supply in the spring/early summer as we would normally expect.


 
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