If the housing market is static, how is it that some properties are fetching well below the asking price and some are being valued at far more than apparently identical homes near by? The answer, of course, lies in three words: location, location, location. And in the current market, with more sellers than buyers, location is the main factor in determining the price and speed of sale.
Buying agents and estate agents classify locations either as A-list — the most desirable for the type of buyer being sought — or B-list, which are those with at least one significant drawback. “Location factors are universal when judging a perfect property if it’s private, secure, aesthetically pleasing and with potential for improving. Being overlooked, having road noise, potential for planning blight and pylons, are all blemishes that affect the price,” says James Greenwood, of Stacks, a buying agency.
The Land Registry, which monitors all UK sales, says that the number of homes bought in 2005 will probably be just 1.23 million, some 10 per down on the recent peak of 2002.
Richard Donnell, head of research at the property database company Hometrack, predicts a further 5 per cent fall this year. He says that, after a decade of high price rises and increasing stamp duty, many buyers cannot afford to move to the next rung of the housing ladder. The result is that we have more homes on sale than there are purchasers — the classic buyer’s market, making it difficult for sellers to obtain asking prices.
Hometrack says that the average seller settles for 93 per cent of the asking price, unless he or she has a property in an A-list location. Like their celebrity counterparts, A-listers can name their price, and often these homes do not reach the open market. Property Vision, a buying agency acting for some of Britain’s wealthiest buyers, says that 63 per cent of the homes it buys for clients do not even have brochures printed because their superior location means that they are sold rapidly and at premium prices.
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Meanwhile B-listers end up accepting a good deal less. James Greenwood says that, if the property is overlooked and has little privacy, there is a discount of between 15 per cent and 30 per cent. Pylons can mean a discount of between 10 and 20 per cent. A noisy road means a discount of between 10 and 25 per cent, and a motorway at least 25 per cent.
There is a time difference too. “A good country house will go under offer in three to five weeks, whereas a blighted property might take six to nine months to sell, and only then at a discount,” says Robert Bartlett, of the estate agency Cluttons. Take the Manor House, a six-bed property in five acres at Sulhampstead in Berkshire. The selling agent, Strutt and Parker, says it should be worth £1.5 million but it has been on sale since June 2005 for £1.3 million because pylons are just beyond the boundary.
In Devon there is Pitt Farm, a 16th-century Grade II listed thatched house at Nadderwater, near Exeter, which has a car repair firm as its neighbour. To make matters worse, the adjacent land also has planning permission for another house that will overlook Pitt Farm. “Not surprisingly, this has seriously harmed the saleability of the property,” says Simon Cooper, of Stags, the agency that originally marketed the house last summer for £380,000 and has now cut it to £365,000. “If it did not have close neighbours, it would have been guide-priced at £425,000 and sold quite readily,” he says.
The same phenomenon exists in cities. Alistair Boscowan, of the Belgravia estate agency Friend & Falcke, says: “The dream location for a London home would be a quiet garden square — not a cut-through or rat-run — with good local shopping facilities, overlooking gardens or trees, off-street parking, and easy access to Tube and bus networks. A park near by would be ideal.”
But places that seem to be perfect London locations, such as South Kensington or Chiswick, can be blighted by Tube noise or heavy traffic. “We’re selling an unmodernised seven-bedroom property in Thurloe Square, backing on to the District and Circle lines, at £2,695,000. A similar house, renovated and without Tube blight, is also on the market for £5.25 million,” says Lulu Egerton, of Lane Fox.
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Chesterton in Chiswick has spent 12 months marketing a semi-detached Victorian house, originally at £995,000 and more recently at £825,000. The property is so close to the A4 that the agent has been unable to take a satisfactory exterior photograph.
Even in smaller towns location is critical, as the sellers of a Georgian house on Puck Lane in the centre of Witney, Oxfordshire, discovered. Connells, the selling agent, admitted it could have been worth between £700,000 and £1 million had it not been for a new housing estate that encircled and overlooked the property. Just before Christmas it sold for £473,000, having failed to find a buyer at £500,000 for several months.
Although all of this is bad news for sellers in B-list locations, it can be a golden opportunity for canny buyers. “If a buyer is prepared to compromise on location, they will want a good discount. In this market that can be 10 per cent to 15 per cent,” says Alistair Boscowan. In other words, for a buyer every cloud has a silver lining. Or should that be location?
Strutt and Parker 01635 521707; Stags 01392 255202; Lane Fox 020-7225 3866; Chesterton 020-8995 3443
A-list versus B-list