Prime country house prices rose for the sixth consecutive quarter between April and June according to Knight Frank.
Prime country house prices in England rose by 1.1% in the second quarter of 2014, taking the annual increase in prices to 5.2% over the year to June.
Although still playing ‘catch-up’ with the prime market in London, where prices increased by 7.8% over the year to May, this is the strongest rate of annual growth in the prime country market in four years.
Looking at market activity, the volume of prime country sales completed in the second quarter was 11% higher than the corresponding period last year. This was driven primarily by the sub-£2m market which accounted for 80% of Knight Frank sales over the three months to June.
The higher volume of sub-£2m sales has contributed to stronger price rises for homes valued below this threshold. While average values of sub-£2m prime properties rose by 1.3% between April and June, growth in value for houses worth over £2m was 0.6%. Super-prime homes, worth over £5m, actually fell in value by 2.3% over the course of the quarter, although they remain 1.2% higher on an annual basis.
While there are indications that buyers have started to factor the higher 7% stamp duty charge for £2m+ properties into decisions, fresh uncertainty surrounding the possible introduction and form of a “Mansion Tax” has contributed to lower price growth for homes worth £2m+.
On a regional basis, the Home Counties and South West markets have continued to benefit most from the “London ripple” effect, with house price growth spreading outwards from central London.
Additionally, these markets are being boosted by the return of London buyers. This is reflected in country ‘hotspots’, many of which are close or within commuting distance of the Capital. Prices of prime property in Winchester and Cobham rose by 2.6% in the second quarter, while prices in Virginia Water were 2.5% higher and in Oxford values climbed by 1.8%.
Looking to the future, there are signs momentum may be slowing slightly. While the number of property viewings was fairly steady during the three months to June compared to the same period last year, the number of prospective buyers registering their interest in buying a prime country home fell by 2%.
Rupert Sweeting, Head of Knight Frank Country, comments:
“After little or no price growth for a couple of years, the increased activity in the country market is slowly filtering through to price growth. There are areas that are more active than others with counties like Hampshire seeing a significant increase in sales reflecting renewed confidence from London (and often city employed) buyers. The ripples have not reached the far flung counties which are, as a general rule, more than two hours from London, unless the property is exceptional. As ever those houses that are near perfect are attracting strong interest and this year we have seen competitive bidding return in more sales than for a couple of years.
“One note caution is that pricing strategy is even more vital. Where vendors take agent’s ‘down to earth’ guide pricing, they are being rewarded. If they are overambitious, the house will sit around for some time”