Prime country house prices in England rose 2.5% in second quarter, latest index shows

Prices have now increased during every quarter of the past 12 months with growth highest in the southwest where prices have gone up 3.3% in the second quarter of 2010, according to the latest Knight Frank Prime Country House Index.
 
On an annual basis the Home Counties have seen the biggest rise in prime country house prices with values increasing 10.7% year on year. The report also shows that the rural property market is becoming increasingly polarised between genuinely good properties and over priced ones
 
Total growth for 2010 is now 4.6% and the latest quarterly increase means prices have now been rising for 12 months. But they are still almost 15% down from the peak of the market in autumn 2007.
 
‘A continued shortage of property for sale and a resurgence in demand is helping to boost prices in most parts of the UK, but the austerity measures proposed by the Chancellor in his emergency budget means prices are unlikely to rise at the same pace during the rest of the year and some of our offices are reporting that values have already started to flatten out,’ said Andrew Shirley, Knight Frank’s head of rural property research.
 
‘Areas around London such as Henley and Tunbridge Wells with quarterly price growth of 6.6% and 7.9%, respectively, continue to perform strongly, but are predicting that this upwards trend will slow over the coming year,’ he added.
 
The first half of 2010 has been a very stop start six months for the property market, according to Rupert Sweeting, Knight Frank’s head of country department. ‘We had the heavy snow at the beginning of the year, a General Election and then to round it off an emergency budget. All in all there have been plenty of reasons for people to delay the buying or selling of houses,’ he explained.
 
‘But now the landscape is pretty clear and people are starting to get on with things again. The volume of pages we are taking in Country Life, which is a good barometer of the health of the market, is up by around 15% this year. The economic outlook is admittedly looking tough following the emergency budget’s wave of cost cutting, but at least we know where we stand in relation to taxation, in particular Capital Gains Tax, which was not increased by as much as many expected. Interest rates also look set to remain low for some time,’ he said.
 
The prime country house market is likely to continue into the usually quiet summer months. ‘But what we are seeing is an increasing polarisation between the really good houses and those that are over priced or not quite scoring top marks for location and quality. We recently sold two wonderful houses in the Cotswolds for a 20% premium, while others have struggled to make their guide prices,’ he added.