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Cautious country house buyers in UK waver whilst London continues to prosper

According to Philip Selway, managing partner at The Buying Solution fluctuating global stock markets, which are often viewed as market barometers, and wide spread speculation in the press of a double dip recession, buyers who are actively in the market believe that the boot is firmly on their foot.
However, the country property market is still dominated with over enthusiastic prices which do not necessarily reflect the softening market, so there continues to be an imbalance between vendor and purchaser expectations.

‘Our country teams are currently acting for an unusually high number of buyers, up approximately 20% on last year, but although there are plenty of buyers looking for good country houses, there is currently less urgency to purchase and the negotiations are more complex than usual,’ he explained.

‘When markets are faring well, buyers are more prepared to compromise, so if 7/10 of their boxes are ticked, they are more than likely to proceed. Currently, however, buyers do not want to consider any risk whilst the markets are uncertain and would much prefer for all ten boxes to be ticked, which can sometimes prove to be an unachievable aspiration,’ he said.

‘The country house buyers’ mood at present is to attempt to negotiate sharply down from guide prices, especially when there is no obvious competition. The buyer is also hugely reluctant to bid, in effect, against themselves and in many cases, would prefer to wait until there is competition to confirm the level of market value. All of this slows the process whilst the battle of wills is played out,’ he explained.

In contrast, the prime London market, which is dominated by international buyers, is moving much more quickly.  ‘There is a shortage of property coming onto the market so buyers know that they have to act quickly in order to compete,’ said Selway.

Others report that the prime market is becoming more and more active in central London.  Richard Barber, partner in residential sales at London estate agency, W A Ellis, said that the chasm which exists between prime central London and the rest of the UK continues to widen.

‘Recent sales at Candy and Candy's One Hyde Park, the Bulgari Penthouse in Knightsbridge and many more high value transactions within Kensington and Chelsea and Westminster emphasise the much vaunted opinion that prime Central London property is indestructible, a safe haven and the must have for high net worth international individuals,’ he explained.

The relative safety of London, its educational institutions and its global positioning as the world's leading financial centre, are important factors as to why London is the destination of choice. A favourable tax regime and weak currency are also obvious contributors.

But Barber said this position should not be taken for granted. ‘The market can be adversely affected by terrorism, poor perception of our security forces and global financial crises. It is only three year since the last financial meltdown and whilst we are all conscious of the debt crisis in the US and the Eurozone. It is quite possible that the phenomenal growth that we have seen throughout central London may well soften over the autumn and winter months,’ he added.

‘I believe that prices will plateau but we will continue to see a healthy level of transactions, particularly from investor buyers between £1.5 million and £3 million, however, developers building future price increases into their current computations should proceed with caution,’ said Barber.

Lucy Morton, senior partner and head of lettings at W A Ellis, said that short lets are bouyant in London with the Olympics coming up next year. But she has some words of caution. ‘Every summer, there are some in SW19 who vacate their homes and let them for the Wimbledon fortnight for a substantial and inflated amount. News that local authorities intend to clamp down on these  short lets by insisting that landlords apply for licences has sent a nervousness into this market,’ she said.

‘Councils such as Westminster require landlords looking to rent out their properties for less than three months to obtain a licence which is not guaranteed to be granted. This came about in an attempt to protect both bed and breakfast and hotel businesses from being undercut, as well as from particular flats in blocks being used like a hotel for short term occupancy,’ she explained.

‘Short lets are common in the Capital with the vast majority offered to visiting professionals, and there are many agents offering services to those looking to rent out their homes for short periods. With London preparing for next summer, there will be more than the usual demand for accommodation. No doubt Lord Coe and the 2012 Committee will be hoping that London landlords will also rise to the challenge and although there are few records of prosecutions by councils, those caught without the necessary paperwork could face a substantial fine,’ she added.

Looking to the long term she reported that there has been increased activity at the very top end of the market. ‘Due to the lack of stock on both markets, the super prime will now happily either rent or buy in order to secure the right property. We have let several properties in the last month at the very top end, one of which is in One Hyde Park. We see this trend continuing and we have an ever increasing share of this market,’ said Morton.

Find out more about the top end property market in the new October edition of Property Wire Confidential magazine;