Tony Wright, Head of Residential Agency, Carter Jonas, Harrogate
The UK property market is all too often discussed as a single entity, with commentators failing to recognise the nuances of each regional market. Reading the national news, it’s easy to believe that the UK’s property bubble is about to burst, prices are flatlining, buyers are crippled by the Stamp Duty Land Tax reforms of 2014, Brexit has created a climate of uncertainty and the shadow of Trump continues to loom large across the Atlantic.
However, I’ve come to digest these reports with some indifference, because they have little bearing on the Yorkshire market, which has developed its own robust property microclimate.
As far as Yorkshire is concerned, demand on the whole outweighs supply, which is the optimum equation to underpin a thriving property market. While prices have undergone steady growth since the last market trough of 2008, the rate of growth has been sustainable and buyers have continued to afford the next rung up the ladder. By contrast, the market in London and the South East has experienced unsustainable acceleration in house price growth.
The mentality behind both markets is distinct; while buyers in London and the South East are accustomed to property in boom and bust cycles, buyers in Yorkshire have found a new confidence in the departure from this pattern. Steady growth has meant that buyers are purchasing property as a longer-term investment, rather than looking to cash in on capital appreciation after a year or two. This in itself has insulated Yorkshire from the over-inflation in London and the South East.
This has also reintroduced the pleasure of buying property. Buyers are taking the time to consider the enjoyment of living in a property, rather than it feeling little more than a business transaction.
Furthermore, London and the South East’s market is made up of accidental millionaires, homeowners whose property has rocketed in value since purchase, pushing their most valuable asset over the million-pound price point. While this might sound like a model to which we should all aspire, Stamp Duty is proving to be an insurmountable hurdle. For those accidental millionaires wishing to move house, the cost of an extra bedroom on average amounts to another £100,000 to £200,000. Assuming that a vendor is selling a property valued at £1,000,000 and upsizing to a property valued at £1,200,000, the Stamp Duty is £63,750, and that is before factoring in moving costs. Of course, when a homeowner is only a millionaire in assets, finding over £60,000 in available cash to meet the demands of Stamp Duty can prove impossible.
In Yorkshire, because we aren’t facing the accidental millionaire property conundrum to the same extent, and because prices have grown steadily rather than unsustainably, applicants who are buying over the £1,000,000 threshold are doing so because they have the assets and cash flow. This means that, for the majority, Stamp Duty isn’t quashing the market.
Of course, irrespective of our distance from London and the South East, the property market is linked to the broader economy but Leeds, and to some extent York and Harrogate, have emerged as primary business hubs. The arrival of big accountancy and legal firms offers an underlying strength that safeguards a new wave of employment opportunities for the next generation. They are of course the homeowners of the future, so while the jobs market is burgeoning, Yorkshire’s property market is set to prosper with a level of independency and detachment from the mechanics of London and the South East.