Prices for prime country houses dropped on average by 4.7% in the first quarter of 2009, compared with a 9% fall in the last quarter of 2008, according to the Knight Frank Prime Country House index.
But although the pace of the decrease is slowing average prices have now fallen by 20% in the past year. The Home Counties in the south of England saw the smallest quarterly drop, the north and Scotland the greatest.
But there is some good news in that sales volumes are now increasing in some areas, the index also shows.
'The price of prime rural property continues to reflect the weakness of the general housing market in the first quarter of this year, but the rate of decline has slowed substantially,' said Andrew Shirley, Knight Frank's head of rural property research.
'I think buyers, particularly those with money on deposit at very low interest rates, are certainly starting to perceive that property now offers value for money again, especially in those areas where prices have fallen the most. In the Home Counties, for example, values have fallen by 22.5% from their peak, but have dropped by only 3.7% so far this year,' he added.
Shirley said that it is premature to rule out any further falls completely, but it does look like the bottom of the market could be near around London and this has been reflected by an increase in market activity in the company's Home Counties' offices.
On an annual basis, prices have fallen the least in Scotland and the north of England and this explains why these areas are now playing catch up, with prices falling by 6.3% in the first three months of the year.
The report also indicates that viewings are starting to approach normal levels and there is even a return to competitive bidding in some circumstances.
'More realistic pricing from vendors and a determination by purchasers to get on with their lives means we are now closer to that magic point where both parties' aspirations neatly coincide,' explained Rupert Sweeting, Knight Frank's head of country department.
