Prime sales in regional towns outperformed and are just 3.3% below the 2007 peak, whilst rural sales are still 18% below peak levels and there is particularly robust growth in commuter locations such as Cobham, Henley, Berkhamsted, Beaconsfield and Oxford.
But the sales recovery is highly regionalised. The firm’s report says that the turning point for the prime market outside London happened in early 2013 and the recovery has continued in 2014.
As the mainstream housing market continues to pick up, with both sales and prices rising, regional prime markets have also strengthened. Knight Frank data shows that the number of new applicants registering their interest in purchasing a country property has increased by 13% over the year to May 2014 compared to the same period 12 months previously.
But rising interest among potential buyers tells only half the story. Another measure of the health of the prime market can be achieved by assessing activity. Across England and Wales, excluding London, annual sales of properties valued at £500,000 and over rose by 35% in the year to March 2014 compared to the previous year, with transactions higher in all regions.
Transactions increased across all price bands, including a 40% jump between £1 million and £2 million, a 35% rise between £500,000 and £1 million and a 22% increase for £2 million plus homes, according to data from the Land Registry. In Scotland, total sales volumes were over 20% higher at the end of the first quarter of 2014 year on year.
Knight pointed out that while rising sales volumes are good news, prime property purchases in England and Wales, excluding London, are still almost 10% lower than the peak of the market in 2007, and in many parts of the country remain even further below where they were at the height of the market.
However, the growing trend for prime market purchasers to target town and city properties outside of London has helped fuel demand for homes in urban markets. While both prime urban and prime rural markets have enjoyed a pickup in demand, there has been a divergence in performance.
Town and city markets have seen a much faster rise in activity than neighbouring village and rural locations. In fact, at the end of March, annual sales of prime urban homes were just 3.3% below their previous market peak in 2007. In comparison, sales of prime rural properties were 18% below peak levels.
‘There are several reasons why the urban homes market is in strong demand. Those with young families moving out of London want to take advantage of the significant price differential between London and the rest of the UK, whilst at the same time live in an urban area where their children can go to first rate schools within walking distance,’ said Rupert Sweeting, Knight Frank Country.
‘There are similar recreational opportunities as they are/were used to in London such as restaurants, transport links, local amenities etc. In addition we are seeing an older generation of buyers whose children have fled the nest, but are still fit and want to move to a town to be within walking distance of the shops, restaurants, GP surgeries as well as to have the ability to lock up and leave. Previously they have had to worry about the general maintenance of their rural property,’ he added.
As the wider economy continues to recover, Knight Frank expects the prime market will grow this year. However, with an election in 2015, and property taxes likely to be high on the agenda, the market may be buffeted by some headwinds in the short term.
