Grainne Gilmore, Head of Knight Frank UK Residential Research, Knight Frank, comments:
“Despite recent headline price falls, there are marked differences across the regions, with the Home Counties benefitting from money flowing from London and overseas. Prices in the Home Counties have been the most resilient over the last year, slipping by just 1%. They are still 10% higher than the market trough in 2009.
“Overseas buyers, who are very active in the Prime Central London market, are also interested in larger properties just outside the Capital, especially those near the best schools, supporting prices. Domestic buyers moving out of Prime Central London, where prices have reached record highs, are also key players in this market.
“The £5 million-plus market for prime country properties continues to strengthen. Average values for these properties are still rising, up 1.2% on the year and approaching levels last seen when the market peaked in 2008. Demand has remained strong, with viewings rising by 13% in the three months to the end of November compared to the same period last year, and the number of new buyers registering their interest remaining steady.”
Rupert Sweeting, Head of Country Department, adds: “Move much beyond the M25, however, and the market is more heavily dependent on domestic buyers. The deterioration in economic confidence has taken a toll on buyers across all property sectors over the last year and the prime market has been no exception.
“Price falls in the North of England have been the most pronounced, with a 10% annual decline in prices. As the Eurozone crisis drags on, there is little sign that economic worries will be calmed in the months to come. Despite this nervousness, overall demand in the market was steady in the final months of the year, with an 11% rise in new buyer applications and a 4% rise in viewings. Supply levels have also risen compared to last year, with a 12% rise in new instructions and higher stock volumes.
“The real sticking point has been in converting offers into sales. The rate of withdrawal for buyers who have agreed to purchase but who withdraw prior to exchange of contracts has risen sharply this year. Issues securing mortgage finance and increasing nervousness about the economic outlook have been the main reasons that buyers have walked away from deals at the final stages.
“The market, especially for properties worth less than £5 million, is treading water but there is an opportunity for those trading up, as the gap between the value of their current home and the next level up on the ladder is narrower than it has been for quite some time.”
“Despite these difficulties, it is worth noting that activity in the prime market has been much more resilient than in the mainstream UK market. While prime country sales are 16% lower this year than the market peak in 2007 (comparing January to September 2011 to the same period in 2007), sales in the mainstream UK market have halved over the same period.”
For further information, please contact:
Grainne Gilmore, Head of UK Residential Research, Knight Frank:
+44(0)20 7861 5102, [email protected]