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High Value Properties Facing Carnage In The East Midlands.

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I’m sitting pretty waiting for the right moment to get a decent country house. I thought that sometime during the last 5 years or so something would come up at the “Right” price, but asking prices are so far from the true market (meaning the level at which buyers will transact) That there is a growing and massive oversupply.

Up until now I’ve just been following the fortunes of houses I have been watching – and of 87 properties which piqued my interest– and are now off - only 21 appear in land reg sold figures (there are an additional 5 which went STC and could still conceivably be stuck in a chain) so I could say that 60 were clearly overvalued.

I recognised that this sample, whilst telling, was hardly scientific, so to get a feel for how much “pent up supply” there is in the area I’ve used Rightmove to compare properties for sale within 5 miles of Castle Donington to properties sold within 5 miles of Castle Donington.

To begin with, property over 1 million

on the demand side there has only been one sale recorded at this level since 2008 – £1,175,000 for a peach of a place.
On the supply side there are five million pound houses on the market – so approximately enough to satisfy 25 years of demand!

Next segment is houses between 1,000,000 and 500k

On the demand side there have been 74 sales at this level – we could also be charitable and add on another 6 just below (1k) the threshold so let’s call that 80 sales in this segment in 5 years

On the supply side there are 225 currently for sale using the same criterion, I make that about a 3 year supply at current transaction rates.

These figures ignore the large number of unsold properties which have been unsuccessfully marketed/owners given up, but which could also be considered to be part of this “Pent up” supply.

In this Mexican standoff , you can presumably count the possible buyers at over 500k on fingers and toes and clearly they have mostly decided they are waiting it out. Once these are gone the drops to find buyers will have to be massive – it will be carnage!

Assuming that sellers are serious about selling the only outcome I can see is that these properties begin dropping through the 500k SDLT threshold where they might find buyers bored with the **** that comes on at £450k. Significant top end reductions triggering a downward cascade is the mechanism I see which could being transaction levels back to historic levels – the bottom end is propped – the top end is not and it looks to me that in this region at least is beginning to show signs of cracking. Those who reduce early will pick up the asset rich who are currently sitting tight, the last to blink/reduce will be scratching around for those dependent upon large mortgages & with wages static that support level is going to be pretty uncomfortable for someone who thinks they own a house worth “3/4 of a mil”.

It sometimes feels like I’ve eaten all my popcorn while watching trailers and waiting for the main feature – but I’m comfy in my chair, I’m a patient man, and it looks to me like the main event – when it comes – has to be worth it!

Are things particularly bad in my region in terms of the mismatch between marketing valuations & transactions how many other areas see this pattern play out at the top end?

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