27
Jan
2010: A time to invest in high-end property?
With the difficult year of 2009 now behind us, there are some
indicators that the next ten years could be a good time to invest
in high-end property.
For starters, Rightmove has reported that asking prices in the
first week of the year rose by 0.4 per cent in January 2010
compared to the previous month and by 4.1 per cent compared to
January 2009. The organisation revealed that the average asking
price stands at £222,261.
Confidence also appears to be high, with other Rightmove research
indicating that over half (53 per cent) of the public believe
prices will rise in the next 12 months, compared to the 13 per cent
who think they will drop.
Almost half (46.8 per cent) of people said they believe house
prices will increase by up to ten per cent this year, while 6.7 per
cent believe they will rise by over ten per cent.
According to Lucian Cook, director of Savills Research, a
regionalised market recovery is inevitable. She believes a "ripple
effect" will emerge from the prime markets of London and the
south-east of the UK.
It seems that the high-end property market could be something of a
safe-haven when it comes to investment, as Savills expects to see
sustained house price growth in the equity-rich, prime hotspots
from 2011 onwards. Ms Cook said that the firm anticipates "a
significant lag in areas blighted by low levels of equity, high
unemployment levels and the prospect of very slow economic
recovery".
She commented: "A decade of relative sobriety in mortgage lending
suggests that the regions where equity and cash are most
concentrated will see the earliest and most sustainable price
growth over the next decade.
"Without doubt, this points to many of the higher value prime areas
which have recorded the lowest percentage growth over the
noughties."
But what kinds of property might people be wise to invest in? In
other predictions, Savills has said that average farmland values
will continue to increase in the short and medium term by
approximately six per cent every year.
"There are still useful tax benefits both in trading and owning
land quite apart from the potential windfalls from development in
the future," commented Crispin Holborow, head of the Savills
country department.
"Land also has obvious lifestyle attractions and an improvement in
the amenity and country house markets in the second half of the
year have reinforced the rises in farmland values recorded since
June," he added.
Savills claimed that there is currently an estimated £7.5
billion of money available to buy farms and estates, based on
analysis of the organisation's applicant register. From this, it
asserted that over one million acres of farmland, at an average
value of £7,500 per acre, would be needed for these funds to
be used up.
Ian Bailey, head of rural research at Savills, meanwhile, said the
company projects that average grade-three arable land values in
England might reach £7,000 per acre over £5,000 per acre
in Scotland, although the best land may reach £10,000 per acre
"well before 2015".
The real estate service provider also believes that the supply of
farmland at a national level will not rise to the point of a
saturated market, which would require at least 130,000 acres of
average annual supply of farmland to occur. All of this could be
great news for anyone considering investing in a high-end
countryside property.