The price of prime country properties in now increasing across the country as the recovery that started in London during spring 2009 continues to spread further into the regions, says the latest Prime Country House Index from Knight Frank.
‘Prices are now just 2.6% lower than they were at the beginning of the year. An incredible performance considering the general mood of economic gloom that followed the collapse of Lehman’s little more than a year ago,’ said Andrew Shirley, Knight Frank’s head of rural property research.
Property prices in the Home Counties have shown particular resilience, ending the year 1.4% higher. The north of England and Scotland are recovering more slowly with prices down 11% on an annual basis, but up 0.5% in the last three months of the year, the report also shows.
‘There are a number of reasons for this upturn in property prices, but the overriding factor is an imbalance between supply and demand. What we are seeing is an increasing number of people competing for s diminishing pool of properties,’ explained Shirley. Across Knight Frank’s network of country offices the number of new potential buyers registering increased 50% last year and the number of sales grew 28%. At the same time, however, the volume of available property fell by almost a third.
Shirley said that potential purchasers are more confident because they feel prices have reached the bottom and are no longer worried about buying into a falling market. The cost of borrowing remains low and credit availability is gradually improving, adding to the optimism.
‘Around London we are also seeing an increasing number of overseas buyers returning to the market with demand for properties over £5 million growing significantly towards the end of the year,’ Shirley added.
Although the best properties are now attracting competitive bidding on a regular basis and guide prices are exceeded in many cases, there is no sign of a return to boom times, according to Rupert Sweeting, Knight Frank’s head of country department.
'Buyers do remain price sensitive and it is the houses that tick literally every box that are attracting the most competition. Currently, we see few signs that stock levels of the best houses will increase markedly in the New Year and the forthcoming general election could exacerbate the situation further,’ he explained.
‘Coupled with the growing number of frustrated buyers looking for houses, this should help to ensure prices do not fall back. The most likely scenario is a levelling off sometime in the middle of 2010,’ he said.
