Prime country house prices in the UK increased by 0.9% in the first half of 2018 but it has been a mixed picture for this sector of the property market with notable regional variations, the latest index shows.
On an annual basis, prime country house prices have seen an increase of just 0.7% but looking longer term prices are some 10% higher than five year ago, according to the data from Knight Frank’s prime country house index.
But a higher level of annual price growth was recorded in the prime markets of the Midlands and the North, both up 3% year on year and a handful of urban markets have outperformed, with Harrogate, Bristol and Cheltenham all seeing price rises above the country average.
But Oliver Knight, research associate at Knight Frank, believes that rural markets are still looking good value after a few years of subdued price growth although ongoing political and economic uncertainty means there is still an element of caution among buyers. ‘This has kept a check on prices, but well-presented and competitively priced homes continue to sell,’ he said.
At a regional level, localised pressures have contributed to wide variations in price growth. Knight pointed out that markets outside the traditional London commuter zone have generally enjoyed the strongest rises and the ongoing pressure on property prices in prime central London is being reflected in the markets immediately surrounding the capital.
On average, prices for prime urban homes have risen by 16% over the past five years. By comparison, a few years of more subdued price growth has left more rural markets looking good value. ‘As demand picks up we expect to see house price growth in rural locations converging with urban markets,’ Knight explained.
He also pointed out that it is now over three years since the overhaul of stamp duty and the market above £1 million remains price sensitive. The data suggests the need to price realistically at the outset remains as important as ever.
Indeed, homes that sell within 5% of their original asking price do so considerably faster than those where vendors have had to make bigger discounts to find a buyer, the analysis of prime market sales data over the last 12 months shows.
The report says that there is evidence the market is adapting to the higher tax environment. Listings data from Rightmove shows that of the £1 million plus homes listed for sale at the end of May, some 28% had been reduced from their original asking price, down from a peak of 32% in November 2017. ‘Any fall, or levelling off, of this figure suggests that valuations are becoming more aligned with current buyer sentiment,’ said Knight.
Looking ahead, the firm says that while it is important not to overstate its impact, Brexit continues to create an element of uncertainty among some buyers and vendors. Interest rates are also expected to rise is year, albeit gradually. ‘This underpins our forecast for fairly modest price growth in prime regional markets in 2018 of 1.5% and for 2% growth in 2019,’ said Knight.