Measuring the Soho Farmhouse effect
Making sense of the latest trends in property and economics from around the globe
4 minutes to read
Purchasing a home is about more than bricks and mortar. People are buying a lifestyle, whether they envision nipping out for morning coffee at Monmouth on Borough Market or taking a short walk to relax in the sunken lake hot tubs at Soho Farmhouse in The Cotswolds.
The significance of these intangibles is hard to measure, but it is possible. Thanks to new data from Knight Frank's Analytics team, we now know homes within easy reach of those hot tubs will sell faster than those several miles away. Indeed, properties within a mile of the country's top-tier country clubs exchange hands in an average of about 19 weeks, compared to more than 21 weeks for those six to seven miles away.
Property listings suggest that some clubs have more pull than others. Agents mentioned the various clubs in 3% of listings within a ten mile radius. That figure rises to 12% of homes close to Soho Farmhouse and 4% for listings close to Estelle Manor in Oxfordshire.
"For every ten buyers that contact us with a budget of £1 million to £2 million half mention a desire to be in close proximity to one of the country clubs," says Damian Gray, a Regional Partner in our Oxford office.
House prices
UK house prices climbed 1.6% during the year through March, up from 1.2% in February, Nationwide said yesterday. Values actually dipped 0.2% during March, reflecting the volatility of the inflation narrative in recent weeks.
We started the year in the midst of a price war among mortgage lenders, prompted by very favourable inflation data at the end of 2023. That stalled from mid February onwards amid signs that certain aspects of inflation might prevent the Bank of England from executing the first cut to the base rate until late summer or autumn. That narrative then flipped again, with the BoE back on track for a first cut in May or June.
The volatility will continue - the papers are packed with detail on the outlook for the housing market and buyers are tuned in - but we expect positive momentum to continue through this year and into the next.
"Despite the challenges, including mounting political instability, there should be a recognisable seasonal bounce in activity this spring and we expect UK prices to rise by 3% this year as the market recovers from a subdued 2023," says Tom Bill, our head of UK residential research.
Mortgage lending
Mortgage approvals are perhaps a better measure of the health of the housing market, though we've only got data until February as yet. Net mortgage approvals for house purchase surged to 60,400 during the year through February, up from 56,100 in January, the Bank of England said yesterday.
While that's a sizable uptick, it's still below the 70,000+ monthly figures the lenders were posting in the months running up to the pandemic. Simon Gammon of Knight Frank Finance spoke to the FT:
“The recovery in housing market activity is taking hold despite an uncertain start to the year for mortgage rates. Hotter-than-expected inflation data in January and February prompted a few lenders to notch up mortgage rates, which knocked sentiment, but not enough to kill the market’s momentum."
The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages fell by 29 basis points, to 4.90% in February, the BoE said. The lenders have been fairly quiet over the past fortnight, though that's common over the Easter weeks. It's likely that repricing will continue from next week onwards. Most should be cuts, though the odd lender will raise rates as they seek to control service levels.
Manufacturing
Broader economic confidence is beginning to settle. Manufacturing activity expanded for the first time in nearly two years during March, according to the S&P Global Manufacturing PMI, published yesterday.
Employment and purchasing activity contracted at slower rates. Optimism about the year-ahead hit an 11-month high.
There are still a few worrying signs for inflation. Although only moderate, the rate of purchase price inflation was the fastest for a year. Companies acted to protect margins by raising selling prices for the fifth successive month.
Bank of England policymakers will be watching these figures closely, and the data is giving a few conflicting signals depending on the sector. Shop price inflation eased to 1.3% in March, for example, the British Retail Consortium reported yesterday. That's the first reading below 2% in more than two years.
In other news...
Deloitte opens more offices two years after telling staff they could work from home forever (Telegraph), Morgan Stanley to stay in Canary Wharf for another 14 years (FT), Germany’s largest sports retailer doubles down on physical stores (FT), Yes in my back yard: Keir Starmer targets voters who want more housing (Times), Bezos buys third mansion in Florida (Bloomberg), and finally, US office vacancies near 20% (Bloomberg).