Following three years of falling prices, the prime country house market has come back to life this year, with three consecutive quarters of price growth and the average price of a prime country house has increased by 1.7% since the start of the year.
But the data also shows that the price gap between prime property in central London and the country is at its largest for several decades. It means that those moving from central London to a prime country home now effectively have hundreds of thousands more to spend than if they had made the move back in 2009.
But there are large variations in price growth depending on location with the largest price rises in commuter towns close to London. Overall demand for prime country homes has been strong so far in 2013, with an increase in both demand and sales volumes across the prime market.
‘This increase in buyer activity helps to inform our positive outlook for the prime country market with prices expected to rise in 2014,’ said Oliver Knight, of Knight Frank’s research team.
He pointed out that much of this demand is, however, concentrated on sub £2 million homes sector. ‘Above £2 million the market has been much more sensitive to the increase in stamp duty announced in the 2012 Budget. As a result, vendors have been more hesitant to bring homes to the market and buyers more reluctant to absorb the additional cost,’ he explained.
‘However, for sub £2 million property market the number of buyers registering their interest in purchasing a country house has increased by 8.3% so far in 2013, compared to the same period in 2012, while the number of sales agreed is up by 19% year on year and this increase in activity has had an impact on pricing at this level with average values of sub £2 million prime properties increasing on an annual basis by 1.8%,’ he added.
The data also shows that comparatively, the average price of homes valued between £2 million and £5 million has fallen by 1.1% over the last 12 months, while prices of super prime £5 million plus homes have fallen by 0.2% on an annual basis.
The strongest price rises have been concentrated in locations within commuting distance of London. Prices in the South East, for example, are 1.7% higher than in the third quarter of 2012 with price rises here also supported by increasing confidence in the regional economy.
‘Our analysis of the 10 most searched for counties by visitors to Knight Frank’s property search website in 2013 confirms the popularity of properties within London’s commuter zone. Six of the most popular counties are markets located within commuting distance of the capital, headed by Surrey. Hampshire and Oxfordshire are next on the list followed by Gloucestershire and Devon. Warwickshire, Kent, Buckinghamshire, Worcestershire and West Sussex complete the top 10,’ said Knight.
He also pointed out that with prime prices in London some 24% higher than their previous peak before the financial crisis, country house prices remain 20% below their respective high. But he believes that improving economic conditions should boost confidence, thus increasing stock and transaction levels.
Indeed, the number of new applicants registering their interest in buying a prime country home in the first 10 months of 2013 was 5.5% higher than in the same period of 2012, and property viewings are up over the same period by 11%.
‘This increase in activity has led to a rise in the number of prime country house transactions, which are around 19% higher in 2013 compared to the same period of 2012. We forecast that this market activity will continue to increase as buyer confidence returns,’ said Knight.
‘However, there are likely to be significant regional variations in house prices across the UK, with property markets in the north of England lagging behind those in the south, where growth has been boosted by the rise in property values in London and the surrounding commuter towns,’ he explained.
‘As has been the case through 2012 and 2013, we expect that location and price will have the greatest bearing on growth, with property within commutable distance of London, and the sub £2 million market forecast to see the strongest performance in 2014,’ he added.
