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Prime country property prices in UK rising

In the second quarter of 2009 the average price for prime country properties in the Home Counties rose by 0.8%, according to the latest Knight Frank Prime Country House Index.

Overall, prices for prime country houses dropped on average by under 1%, compared with a 4.7% fall in the first three months of the year. So on an annual basis, average prices have fallen by 17.5% in the 12 months to the end June, compared with a 20% drop in the 12 months to the end of March.

And it is the top end of the prime market that is showing the strongest signs of recovery with UK properties over £5 million increasing by an average of 2.2%.

'We are now seeing real evidence that we are very close to the bottom of the prime country house market with prices already rebounding slightly in some areas. Although average prices across the UK did drop fractionally (0.9%) in the second quarter of the year, the market around London and in south-east England actually showed positive growth,' said Andrew Shirley, Knight Frank's head of rural property research.

'Ironically, it appears that London, which initially looked like it was going to be hit hardest by the credit crunch following the collapse of financial giants like Lehman Brothers, has recovered in confidence the quickest. Well-paid City workers now feel more secure in their jobs and sizeable bonuses already seem to be back on the agenda,' he explained.

'This effect has quickly rippled out to the Home Counties, where many of those working in the financial and associated sectors live. Knight Frank sold more houses in June than in any month over the past three years and the number of new applicants registering with our offices increased by 15% compared with June 2008,' he added.

And it is not just the areas closest to London that have benefitted. Prices have also increased in the Cotswolds where many Londoners buy second homes. Average values around Knight Frank's Cirencester office have risen by 3.4% in the past three months.

But Shirley is still cautious about recovery. 'Despite this more positive sentiment in some areas, it would be wrong to say the market is on its way to a full recovery. Prices in Scotland, for example, fell by 6.3% in the second quarter, with values also showing significant declines in north-east England, down 4% and north-west England down 3%,' he warned.