By Melissa Lawford
Rural prices have soared, London flat values have sunk – now downsizers can get the ultimate payout
In the pandemic-fuelled house price boom, there is a there is a very small group of people who will be the ultimate winners.
Homeowners who are selling up in the countryside and moving back to the capital after lockdown will benefit – twice. They are cashing in on the country house boom, and getting an impressive bargain, at least by London standards.
Jenny Thorndycraft, 45, left the capital seven years ago with her husband Chris, 52, and made a well-trodden move to the countryside. They purchased The Old School House, a five-bedroom Victorian conversion in the Wiltshire market town of Marlborough, for £675,000.
Since the pandemic hit, buyers have moved out of cities in droves. But now the Thorndycrafts are doing the opposite. They are selling up and are planning to downsize with their fox terrier Pip to a two-bedroom house in south-east London.
Mrs Thorndycraft said: “London always had a really special vibe and that is only going to be amplified now that everything is getting back to normal.”
It is a neatly timed move. Regional house prices have rocketed as buyers search for gardens and space in the wake of the mass shift to homeworking. The Thorndycrafts are marketing their home with Hamptons estate agents for £875,000 – £200,000 more than they paid for it, equal to a 30pc profit.
The Thorndycrafts added value to their home by extending and redecorating, but a big chunk of the price jump can be attributed to recent property market trends. The price of country property has jumped 10.5pc year-on-year, according to Hamptons.
Meanwhile, London prices rose by only 1.2pc. The divergence has massively eroded the London premium. Back in 2020, the average property in the capital cost 125pc more than a typical home in a rural area. Now, the difference has fallen 28 percentage points to 97pc – the smallest gap since 2012.
Downsizers are able to take advantage of an even more extreme polarisation – the difference in demand and price growth that has emerged between large country houses and central London flats.
The average price of a detached countryside house jumped 9.2pc in the last year, according to Hamptons. London flat prices, however, fell by 6.9pc.
That means that someone selling a detached house in the countryside that was worth £500,000 last year will now make an extra £46,000. If they were to buy a London flat that was also worth half a million last year, they would save £34,500. Overall, they would be £80,500 better off than if they made the move in 2020.
Camilla Dell, of buying agent Black Brick, said: “The timing for that kind of buyer is perfect. I think we will see an acceleration of people who will bring these moves forward to take advantage of the price discrepancy.”
Liana Loporto, a north-west London estate agent and president of trade body Propertymark, noted one couple whose children recently left home. They have just sold their house in St Albans for £125,000 more than the £1.2m asking price, given each of their sons enough for a house deposit, and have downsized to a flat in central London.
“They had the foresight to come back before everyone else does,” said Ms Loporto. “There is a huge opportunity because London is completely out of sync with the price rises across the rest of the UK.”
She noted a one-bedroom flat in north-west London that would have sold for £425,000 before the Brexit vote. “Now, that same flat is selling for £360,000.” Its value has fallen 15pc in five years.
Patrick Bullick, of Stanley estate agents in Chelsea, said: “Now is the time to sell a country pile and pick up a bargain in central London.”
Countryside prices have long-lagged behind London, now they are starting to catch up
While older London homeowners are sitting tight, rural house price growth has encouraged downsizers in the countryside.
From the beginning of 2020 to the end of May 2021, 11pc of Savills’ sellers in London were downsizing. In rural markets, however, downsizers accounted for 31pc of vendors.
Lindsay Cuthill, of Savills’ country house department, said: “The price rises are a happy accelerator. But it is also because homes are selling faster. It used to take months if not years to sell a country house. Now it can be weeks.”
At the higher end of the market, the numbers start getting particularly silly. Between April and June, prime regional house prices were up 8.5pc year-on-year – the strongest rate of growth in 11 years, according to Savills. In the coastal and £2m-plus country house markets, the respective jumps were 14.6pc and 12.9pc.
The contrast to London was marked. Prime London house prices were up by only 4.3pc, and flats in the most expensive areas of the capital were down 0.6pc in value.
This means that a person selling a £2m country home would get £258,000 more now than if they sold this time last year. If they were downsizing to a £1m prime London flat, they would be paying £60,000 less. Overall, they would be £318,000 better off than if they had made the move a year ago.