Merryn's Blog

Thinking of quitting the capital for the country? Do it now

There’s never been a better time to sell your poky metropolitan flat and buy a huge pile in the country, says Merryn Somerset Webb.

Regular readers will know that we think that property across much of the UK is still grossly overpriced. Inflation is doing its job, of course, and house prices are falling steadily in real terms and often in nominal terms too across the country. However, there is a way to go before we'd want to step in as investors in most places.

That said, two articles in the weekend papers make the point that if you already own property, it isn't so much the absolute price as the value of the trade you make that counts.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

Take the difference between London prices and prime country prices. Since 2007, London prices have soared (up 9.4% in 2012 alone, according to Knight Frank) while prices of nice houses outside London have fallen (down 4.3% in 2012). So sell your London house to buy in the country today and you'll get a much, much nicer manor than you would have in 2007, when the gap between the two was rather smaller.

The Telegraph offers some tempting examples. In Islington, £650,000 buys you a two-bedroom flat on the ground floor looking out over a busy road. In Loxton in Somerset, it gives you a four-bedroom house with an acre of land and £30,000 to spare (although you will find your stamp duty takes care of most of that). In Rye, East Sussex, it gets you the middle class dream (The Old Vicarage) a Grade II house dating from 1600 with "pretty cottage gardens" and fabulous views. Oh, and £65,000 left over.

Advertisement
Advertisement - Article continues below

In the FT, Francesca Steel makes the same point about the differential between Edinburgh prices and London prices. In Edinburgh, prime property prices are down 18% from their peak, and there has apparently "rarely, if ever, been a bigger gap between values in prime London and prime Scotland."

This is, in turn, "fuelling renewed interest from buyers outside Scotland" as well as non UK buyers according to Knight Frank 10% of prime property buyers are now foreign. Even the Russians are arriving: Steel points to four £2m+ sales to Russian buyers in the last year.

Clearly there is good reason for London prices to be outpacing other regions (safe haven demand, cash buyers, etc, etc) and the widening gap between the capital and the rest doesn't for a second mean that prices in the former aren't going to start falling, or that those in the latter aren't likely to keep falling. Far from it.

But if you plan to sell a house in London and buy one elsewhere at some point, you may find that now is an excellent time to do it. It isn't about the actual prices, it's about the gap between the prices.

Advertisement

Recommended

Visit/516758/beyond-the-brexit-talk-the-british-economy-isnt-doing-too-badly
Economy

Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019
Visit/personal-finance/equity-release/600780/equity-release-how-to-tap-your-house-for-cash
Equity release

Equity release: how to tap your house for cash

The pros and cons of releasing equity from your home compared with moving to a smaller one
10 Feb 2020
Visit/economy/uk-economy/brexit/600791/will-britain-close-its-doors-to-immigrants-post-brexit
Brexit

Will Britain close its doors to immigrants post-Brexit?

Details have not yet been forthcoming, but Britain will soon have a new immigration policy. What will that mean for businesses and investors?
8 Feb 2020
Visit/investments/property/house-prices/600795/uk-house-price-rise-brexit-bounce
House prices

Is the jump in house prices just a Brexit bounce, or is it more durable?

UK house prices rose sharply in January. Some of that is down to the end of Brexit uncertainty – but not all. There is a real risk that prices will ke…
7 Feb 2020

Most Popular

Visit/economy/inflation/600799/federal-reserve-inflation-money-printing
Inflation

Here’s why the Federal Reserve might print more money before 2020 is out

The Federal Reserve wants to allow US inflation to run “hot” for a while. But that’s just an excuse to keep interest rates low – and possibly print mo…
10 Feb 2020
Visit/investments/investment-strategy/600804/the-secret-to-avoiding-being-panicked-out-of-your-portfolio
Investment strategy

The secret to avoiding being panicked out of your portfolio

With the coronavirus continuing to occupy headlines, investors still aren’t sure how to react. But the one thing you mustn’t do is panic. Tim Price ex…
11 Feb 2020
Visit/economy/600796/money-minute-monday-10-february-lacklustre-growth-in-the-uk-and-europe
Economy

Money Minute Monday 10 February: lacklustre growth in the UK and Europe

Today's Money Minute looks ahead to the week's GDP growth estimates for the UK and the eurozone, plus inflation figures for the USA.
10 Feb 2020
Visit/investments/commodities/600729/the-rare-earth-metal-that-wont-be-a-secret-for-long
Sponsored

The rare earth metal that won't be a secret for long

SPONSORED CONTENT – You can’t keep a good thing hidden forever; now is the time to consider Pensana Rare Earths and the rare earth metals NdPr.
31 Jan 2020