Driven by a demand that is outstripping available supply, an across the board upsurge in prime country home properties in the UK has brought values close to where they were at the beginning of the year. Affordable interest rates, credit access and the return of consumer confidence and foreign investors have contributed to the market rebound, and should keep prices on an even keel for 2010. See the following article from Property Wire for more on this.
UK Prime country house prices went up by almost 2.3% in the fourth quarter of the year and for the first time since autumn 2007 every region saw an increase, according to a new report.
Prices in this sector are now just 2.6% lower than they were at the beginning of the year and the growth in the market is being led by the Home Counties which has seen 3.1% growth in the quarter and annual growth of 1.4%.
A significant imbalance between supply and demand is pushing prices upwards, the latest Knight Frank Prime Country House Index shows. The north of England and Scotland are recovering more slowly with prices down 11% on an annual basis, but up 0.5% in the last three months of the year.
‘The price of prime country properties in now increasing across the country as the recovery that started in London during spring 2009 continues to spread further into the regions. With prices on average just 2.6% lower than they were at the beginning of the year this is an incredible performance considering the general mood of economic gloom that followed the collapse of Lehman’s little more than a year ago,’ said Andrew Shirley, Knight Frank’s head of rural property research.
‘There are a number of reasons for this upturn in property prices, but the overriding factor is an imbalance between supply and demand. Across Knight Frank’s network of country offices the number of new potential buyers registering with us increased 50% last year and the number of sales grew 28%. At the same time, however, the volume of available property fell by almost a third. What we are seeing is an increasing number of people competing for a diminishing pool of properties,’ he explained.
‘Potential purchasers are more confidence because they feel prices have reached the bottom and are no longer worried about buying into a falling market. The cost of borrowing remains low and credit availability is gradually improving. Around London we are also seeing an increasing number of overseas buyers returning to the market with demand for properties over £5 million growing significantly towards the end of the year,’ he added.
The report also shows that the best properties are now attracting competitive bidding on a regular basis and guide prices are in many cases being exceeded with some properties selling for close to what they would have achieved at the peak of the market.
The big question is what will happen in 2010. ‘Currently, we see few signs that stock levels of the best houses will increase markedly in the New Year and the forthcoming general election could exacerbate the situation further. Coupled with the growing number of frustrated buyers looking for houses, this should help to ensure prices do not fall back. The most likely scenario is a leveling off sometime in the middle of 2010,’ said Rupert Sweeting, Knight Frank’s head of country department.
‘We are, however, some distance from a return to the headiest days of the property boom when even properties with issues such as road noise would command premium prices. Buyers do remain price sensitive and it is the houses that tick literally every box that are attracting the most competition,’ he added.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.