Monmouthshire, South Herefordshire, South Powys and The Forest of Dean Property Market Comment

This Spring briefing is written in an extraordinary time for the UK. We have a socialist government, whilst the US is powering ahead under a second Trump presidency. So what does this mean for the UK property market?

Looking back before going forward, the London the prime market suffered somewhat with the absence of Russian buyers, but the mid-market remained quite busy. With rental costs off the scale, the young in particular were desperate to buy despite the affordability gap being almost insurmountable, currently 14 times average earnings. This was echoed in the Home Counties where the prime market has remained resilient. Further west where commuting to the City is unrealistic, incomes have lagged, thus prices have flat-lined. Second home stamp duty surcharges have also been a drag on prices.

The use of Buying/Search agents is witnessing exponential growth. Prime London and the Home Counties have long been heavily represented with buying agents, now being mirrored in the Cotswolds and the South West. If one is not represented in these areas, you are drastically handicapping yourself. Further out from London the momentum is increasing and before long we expect it to be the norm.

The key to your property buying success

Unlike many search agents we act exclusively for the buyer. We offer local expertise with regional directors based in 18 areas, but we have the weight and breadth of knowledge of a national organisation. If a search covers several different areas, the buyer will have more than one local expert providing input.

The reaction to the IHT fiasco on family farms has clearly been a shock to the Government so we may see thresholds rise shortly. On the ground there seems to be little negative reaction to land values with the demand for development and Green Energy rocketing. Even purchasers of formerly unloved hill farms have half an eye on wind turbine opportunities. £10k per acre for farmland seems to be the absolute base with Grade 1 going for as much as £25k per acre. As for protecting oneself from some of the blights above, the only way to secure your view is to own it so land for privacy remains desperately sought after.

This, of course, provides a good opportunity for buying in the less sought after regions such as ours. The consequences of the last budget are so dire that hopefully common sense will prevail. There seems to be some pullback from the budget and the pressure to reduce interest rates is likely to see the base moving down to around $%. Inflation will ensure some stability in the market and we expect to see prices rise in tandem. House prices rose in Monmouthshire and Herefordshire in 2024 by about 1.6%, and we expect about 2.5% this year. This would appear both sensible and sustainable.

A Stacks new team member

We are delighted to welcome Victoria Main who will be covering Shropshire, North Herefordshire and The Marches. This stunning and unspoilt part of the world is now on everyone’s radar and no one knows the area and market like Victoria. If we can’t persuade you to come to my part of the world, try hers!

Welcome to this autumn briefing which will hopefully be both interesting and accurate. We will cover a few topical issues, but of course you can contact us any time for further clarification.

The starkest statistic for the region is the paucity of London buyers relocating to the area, with local estate agents reporting a 50%+ reduction in their numbers.

The reasons are varied. The Welsh Assembly is guilty of scaring off some potential purchasers with increased taxation and threats of more to come. But whilst this may be true of second homeowners and the higher rate payers of LTT, this does not explain why Herefordshire and West Gloucestershire are suffering in equal proportion. It is actually the London market itself, which was hit hard by the Pandemic that is the issue.

Having said that, London is now recovering well and the buyers will be back. Monmouthshire and the Marches still remain some of the prettiest and most accessible places to live in the UK.

Ignore the headlines ‘House Prices Slump’ – this is sensationalism to sell newspapers. Turnover and transaction levels are down somewhat, with asking prices falling nationally about 6%, which considering their 25-30% rise in the last three years is not a catastrophe. The annual change in the UK house price index was 3.8% in the year to June. The true reality is that common sense is returning, which is a massive relief, after the rollercoaster of the last 3 years.

Examining returns from the property portals such as Rightmove, Prime Location, On the Market etc. one could despair of the amount of price reductions. However, this should not be seen as a drop in values, as they were almost certainly never priced correctly in the first place. Selling agents have to win instructions, and nearly always what potential vendors wish to hear is a high valuation. Remember the old adage that ‘an honest estate agent is bust.’

We could well find that by the end of the year house prices are down as much as 10%, but is this a disaster? Certainly not for the young trying to buy their first house and that must be a priority. Also, not for the considered, sensible, rational buyer making a long-term move. In ten years’ time, today’s prices will look cheap.

The ever-rising interest rates are certainly causing alarm for many. In February 2022 interest rates were 0.5%, with banks and institutions expecting potential rise to 6.5% or even 7%, before returning and settling at around the 5% mark. For anyone under the age of 40, this will seem an enormous rise, although for maturer house owners they are still well below what one might consider the norm. The days of ‘cheap money’ are over and probably not before time. Salaries are rising, especially in the professions and higher echelons of the public sector, and house prices will rise accordingly.

Covid brought a shot in the arm for the country sector, which had never properly recovered from the twin blows of the 2007/2008 Financial Crisis and Brexit. The market may be suffering a hangover from this, but we all have short memories, house buyers shorter than most. With more people WFH and commuting distances significantly stretched, we expect to see London buyers returning and a pretty rosy future for the local market.

Yes, there will be bumps along the way – a potential new government, the ongoing war in Ukraine etc, but the opportunities for buyers to secure a really special home are out there.

Everyone’s circumstances are different, so please do call for an informal chat. Stacks has 17 offices across the UK, so we can help with your property and land search either here in Monmouthshire and The Marches or around the country.

It is simple to describe the market in 2021 in two short words – ‘on fire’. We all know that there was a plethora of buyers for every property and achieved prices were way up on expectation. The obvious reasons ranged from a rush to the countryside and cheap borrowing.

But will this continue in 2022? Unlikely. Though we are in a new virus scare, the rush for space has quietened down and the usual tales of regret and missing city life are appearing in the property supplements. Borrowing is certainly on the up and the recent interest rate rise from .1% to .25% will probably be out of date by the time this ink is dry. Other factors such as Stamp Duty/Land Transaction Tax holidays were largely red-herrings, but the increase in Wales of 1% on second homes must be factored in. Tie this in with other tax rises and one may slowly see the magic money tree wither and common-sense return to the housing market.

So, 2022 will be quieter, but properties will still be coming onto the market driven by the three D’s (ring me if you don’t know these). Pricing will be essential and you will need buying agents to sort through the smoke. Remember, the estate agent instructed almost certainly gave the lowest quote and the highest valuation. And don’t blame them, the system we have produces the adage that ‘an honest agent is bust’. Buyers should also need to take into account the rising cost of energy, green policy differences in the devolved parliaments, local development plans, new agricultural subsidy payments etc etc. I would want someone holding my hand through this process, and if you do, please ring.