How Hybrid Workers & Cash Buyers Are Affecting Yorkshire’s High-End Property Market
We discuss how hybrid workers and cash buyers are affecting Yorkshire’s high-end property market with a panel of property experts. As quoted in The Yorkshire Post:
If you’re a cash buyer at the top end of the Yorkshire prime market, perhaps on the look-out for that idyllic country pile in early 2023, the Bank of England’s December interest rate rise to 3.5 per cent won’t bother you too much, says one leading prime North Yorkshire estate agent.
“A lot of buyers, particularly in the prime markets where purchasers tend to be less reliant on debt to fund purchases, are happy to keep focused on buying a new home at the moment,” says Ben Pridden, director of Hewetson and Johnson. “For example, in August, of the 66 sales in Ryedale, 42 were cash-funded, according to the Land Registry.”
In Harrogate, where Alex Goldstein is based, the independent property consultant reports another buying demographic which will be largely immune to the BoE’s interest rate’s foreboding effect on mortgage costs, borrowing and affordability conditions.
“As well as the steady and continued influx of buyers from London and the Home Counties, we’re also seeing a lot of money coming in from international quarters, in particular from the USA,” he says. “Half a percent increase and the potential effect on mortgage rates is not going to make these buyers panic.”
Goldstein also points out that UK buyers moving north, perhaps to return to their Yorkshire roots to raise young families, or be closer to older parents, are likely to hold the kind of executive-level jobs which allow for effective hybrid working, perhaps spending two or three days a week in London and the rest at home.
If they’re selling their London or South East home, this means that they will be typically be coming with a decent-sized deposit. Arriving with job and impressive existing salary intact also means their buying power is likely to be heightened. This will give these buyers an edge over local buyers, with their affluence to some extent insulating them from the harshest realities of interest rate rises.
Karl McArdle, CEO of Wetherby-based The Property Buying Company, which buys properties for cash, thinks that in general, the middle of the Yorkshire market will prove the toughest testing ground as we enter 2023.
“Unless you have recently reached the high end of the market, with a two to five year fix [mortgage], you may be feeling the pressure. We will have people climbing down, but not as many people that are climbing up into the middle end position,” he says. “And these are the people who are going to feel pound for pound the biggest difference on the interest rates, particularly those with the bigger house and the bigger energy bills.”
Hilary Pegrum, marketing director of Blenkin & Co in York, agrees: “Since the interest rate rises last autumn, and the cost of living crisis in general, we’ve already seen dips for some properties. This is especially true where they’re one of many, in competition against others, apartments, small terraces. “Apartments have felt the hardest hit, the volume market.”
Desperate buyers keen to offload smaller properties are, however, providing new opportunities for investors. McArdle expects to see “an influx of investors from the South taking advantage of some discounted properties in the North in early 2023.
“This is an opportunity to expand your portfolio if you are an investor, to pick up some real bargains on the market, as motivation levels are high, with the opportunity to invest in discounted property.”
So with interest rates set to rise yet higher in at the next BoE statement in early February to keep inflation in check, get ready for an interesting and not entirely predictable start to 2023.
Pegrum says that the interest rate already going up to its highest rate for 14 years will have a profound effect on how people decide what to buy: “It will change the landscape of buyers. The greatest impact will be how people approach buying a house. They will definitely be taking a long-term view.
“We’re going to see less people buying and flipping. We’re going to see people making good, rational long-term decisions, choosing a house they’re going to buy and live in for 20 years, a generation.”
One property with much long-term potential coming on the market in early January is Knavesmire Lodge on Tadcaster Road in York, a six-bedroomed Regency villa, with a separate garden flat and coach house, priced by Blenkin & Co at offers in excess of £950,000. “It hasn’t been on the market for 40 years,” says Pegrum.
As potential vendors decide whether 2023 will be the year to take the plunge and sell up, they should be aware that there is definitely a shortage of stock for these ‘forever homes’ in Yorkshire Hilary talks about.
“If you’re selling an old vicarage north of York, great,” she says. “Whatever happens with the interest rate, people will still be fighting to pay good money for that.”