Home Counties lead the way as confidence returns to country house market, says Knight Frank

Latest results from the Knight Frank Prime Country House Index

Key Highlights:

  • The average price for prime country properties in the Home Counties rose by 0.8% in the second quarter of 2009, according to the Knight Frank Prime Country House Index
  • Overall, prices for prime country houses dropped on average by under 1%, compared with a 4.7% fall in the first three months of the year
  • On an annual basis, average prices have fallen by 17.5% in the 12 months to the end of Q2, compared with a 20% drop in the 12 months to the end of Q1
  • Across the UK properties over £5m showed the biggest average increase (2.2%)

Andrew Shirley, Knight Frank’s head of rural property research commented:

“We are now seeing real evidence that we are very close to the bottom of the prime country house market with prices already rebounding slightly in some areas. Although average prices across the UK did drop fractionally (0.9%) in the second quarter of the year, the market around London and in south-east England actually showed positive growth.

“Ironically, it appears that London, which initially looked like it was going to be hit hardest by the credit crunch following the collapse of financial giants like Lehman Brothers, has recovered in confidence the quickest. Well-paid City workers now feel more secure in their jobs and sizeable bonuses already seem to be back on the agenda.

“This effect has quickly rippled out to the Home Counties, where many of those working in the financial and associated sectors live. Knight Frank sold more houses in June than in any month over the past three years and the number of new applicants registering with our offices increased by 15% compared with June 2008. This helped push prices up by 0.8% in the second quarter of the year. And it is not just the areas closest to London that have benefitted; prices have also increased in the Cotswolds where many Londoners buy second homes. Average values around Knight Frank’s Cirencester office have risen by 3.4% in the past three months.

“Prices seem to be recovering most quickly for smaller properties, with the average price of a cottage falling by just 0.4%. Manor Houses, on the other hand, fell by 1.9%. The rarest and most expensive houses, however, do seem to be bucking the trend with the price of £5m+ houses recording a 2.2% increase.

“Despite this more positive sentiment in some areas, it would be wrong to say the market is on its way to a full recovery. Prices in Scotland, for example, fell by 6.3% in the second quarter, with values also showing significant declines in north-east England (-4%) and north-west England (-3%).”

Rupert Sweeting, Knight Frank’s head of country department said:

“It is encouraging that the fall in the price of prime country houses has at last virtually levelled off. After five consecutive quarters of declining values, the market needs a period of stability to help bring back some confidence for buyers, sellers and, in particular, lenders, who remain very cautious. Demand from buyers is already up as people, spurred on by low interest rates, have decided to get on with their lives.  Our Country Department sold 36% more properties last month than in June 2008 and viewings were also up 12%. Now the market needs more stock and credit  to satisfy this demand.

“We must, however, be realistic. Vendors holding off on a sale in expectation of a quick return to the market peak of 2007 will be disappointed. Likewise, anybody who thinks now is the time to increase the guide price of the house they are selling may struggle to attract interest. Purchasers remain price sensitive and the market is still finely balanced – it would be easy to trample the green shoots before they had really emerged.

“A real shortage of supply has helped push up values slightly in some areas, but once availability builds again prices will probably remain flat for some time, possibly into the second half of next year.”

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