Grainne Gilmore, Head of UK Residential Research, comments: The pace of decline in country house prices eased in the first three months of the year, with the 0.5% quarterly fall marking the most modest drop in a year. But because of a slight rise in prices in the first quarter of last year, the annual comparison is less flattering, showing a 4.1% fall in values.
“Looking across the price spectrum, it can be seen that the emerging trend of outperformance among the most expensive properties has continued. The average value of luxury homes worth £5 million and more climbed by 2.1% in the first three months of the year, and is at the highest level seen since September 2008, when prime prices were just coming off their peak. Interest in top-end properties is strong among overseas buyers, especially for homes worth £10 million or more.
“Initial feedback from agents suggests that the changes to the stamp duty regime have been factored into purchaser’s budgets. Moving to the other end of the price scale, demand in the country market becomes more domestic. The economic turbulence buffeting the country has had an impact, and has taken a particular toll on the market for homes worth £1 million to £2 million, where values fell by1.4% on the quarter.
“The introduction of the 7% stamp duty for purchases of homes worth £2 million or more could re-invigorate this market, especially if homeowners from London decide to move out of the capital to the country where they can get more ‘bang for their buck’. This may further bolster markets in country “hotspots”, especially those relatively close to London, such as Oxford and Basingstoke where average property values continue to hold their own. Prices in the north of England fell by 1.4% between January and March, while prices in central England fell by 1%. The best performing region between January and March was the South West, where average values edged up by 0.4% on the quarter.
Supply and demand also rose and new application rose by nearly a third between January and March compared to the same period last year, and viewings climbed by 25%. New instructions for sales were up 25% and the number of exchanges grew by 13%. Agents report that some local markets have been re-ignited by a new influx of sellers who have set realistic asking prices. Activity is expected to continue to rise in the traditional selling months of April, May and June.”
Rupert Sweeting, Head of Knight Frank’s Country Department, adds: “The pick-up in market activity seen in the first three months of the year has been concentrated in areas close to London. Here, a rise in new supply was more than matched by growing demand. We expect even more activity in the traditional selling of April, May and June.