Property prices in the UK’s prime country house market increased by 0.4% in the first quarter of 2018, reversing a 0.2% fall in the third quarter of 2017, the latest index shows.
On an annual basis prices in the prime country house sector remained almost unchanged with a 0.2% increase and price growth is softening in previously strong urban areas, down by 0.1% over the last 12 months.
However, the value of homes in more rural settings increased by 0.5% in the first quarter and were up 0.4% annually.
The report says that overall an imbalance between supply and demand remains the main factor underpinning prices. Indeed, some 21% fewer £1 million plus properties were listed for sale outside London during the first three months of 2018 compared with in 2017.
The report suggests that stamp duty is still affecting supply issues, compounded by the ongoing uncertainty over Brexit. This has resulted in some prospective vendors adopting a cautious attitude, particularly at the top end of the market.
‘Perhaps counterintuitively, this recent tightening of new supply follows a period during which activity in prime markets has been fairly robust. Data from the Land Registry, which covers transactions that took place in the 12 months to November 2017, showed the number of £1million plus sales completed outside of London was 10% higher year on year, indicating that the underlying demand for homes remains fairly strong,’ said Oliver Knight, research associate at Knight Frank.
There are also strong regional variations between prime markets, with growth ranging from 3.1% in the North to a fall of 3.8% in North Surrey. Yorkshire and the Humber, the North West, Wales and the West Midlands saw £1 million plus sales volumes increase by more than 20% as buyers cast the net wider.
Meanwhile, Knight Frank data suggests a reasonably active start to 2018 with increases in the number of viewings conducted and offers made. Agents note that where vendors are willing to take a more pragmatic approach to pricing, deals continue to be agreed.
‘Over the past 10 years urban areas have outperformed their rural counterparts in terms of price growth as people are drawn to town and city amenities, transport links and good schools. On average, prime urban values stand about 5% above their pre-crash peak, while rural values remain around 10% below, Knight explained.
‘However, our index points to a softening in prices in town and city markets over the last 12 months. The opposite has been true for more rural markets which look relatively good value for buyers in comparison,’ he explained.
‘As demand picks up we expect to see house price growth in rural locations continuing to converge with urban markets, especially for homes located in and around villages which maintain good transport links and amenities,’ he added.
