Country house market slows in the final quarter of 2007

The country house market remained relatively firm in the final quarter of 2007 with prices falling by -0.04% overall, according to the Knight Frank Prime Country House Index.

Overall prices for country properties rose by 7.9% over 2007.

Prices for manor houses were unchanged in the final quarter, although over 2007 as a whole they saw growth of 10.5%.

Farmhouses experienced a small increase in value in the final quarter at 0.6% and ended the year 8.4% higher.

Country cottages saw the weakest performance with values falling -0.7% in the final three months of 2008, although they showed modest growth of 4.9% over the year as a whole

Liam Bailey, Knight Frank’s Head of Residential Research comments: “Following the credit crunch in August, it was likely that the end of 2007 would see a noticeable slowing in all residential markets – including the prime markets. The country house market was no different and the final quarter of the year saw prices fall back, albeit marginally. We would note that in each of the last 12 years the final quarter has always been the weakest in terms of price growth and we shouldn’t be overly despondent about a fall of -0.04%.

“As with the top of the London market, prices of the most expensive country houses grew most strongly. Those properties in the over £4m price range recorded growth of 15.1% for the year. Lower down the price bands, properties under £1m didn’t perform quite as well achieving only 8.1% on an annualised basis.

“The uncertain economic conditions in late autumn undoubtedly caused potential buyers to reconsider their purchasing options resulting in the country house market become noticeably less buoyant at the end of the year However, as might be expected the more expensive manor house market performed well with prices 10.5% over the year against 8.4% for farmhouses and 4.9% for country cottages.”

Rupert Sweeting, Knight Frank’s Head of Country Department says: “The final quarter of 2007 was a story of two halves. Until mid November the market was clearly taking stock of the impact of the credit squeeze and potential purchasers were playing a waiting game. After that point the mood appeared to lighten with interest picking up across the board, but most noticeably in the £3m to £4m and above price band.

“I predict a two-tier market will develop in 2008 between properties that can be described as being perfect and those less so. With this in mind I would counsel vendors to remember that we are currently in a buyers market and to accept realistic valuations.”

Regional variations
As might be expected, with the credit crunch bearing most on the City and financial services sector, the regional market tended to be stronger further away from London.

This was evidenced by the two regions of Scotland and Yorkshire & Humber, both of which saw price rises of 1% during the final quarter. With the exception of the West Midlands, which saw prices fall by 1%, prices in the other UK regions remained largely static despite anecdotal signs of increased activity.

Purchasing profile
A noticeable trend over 2007 was the increased importance of the overseas purchaser. A record 42% of £5m plus properties in the south east were bought by international buyers, the highest level on record and well above the 34% figure recorded in 2006.

Across the UK as a whole across the country house market, overseas buyers accounted for 9% of all transactions, though this figure rises to 28% for properties of £5m or more.

Manor houses
Although Manor Houses showed no sign of growth in the last quarter, over the year as a whole they performed well finishing the year 10.5% higher. The typical example in our basket is now valued at £3,202,800.

An example of a property currently being marketed in this sector by Knight Frank is Aldertons, Send Marsh, Nr Woking, Surrey – a delightful Grade II listed seven bedroom period farmhouse in a convenient location. Guide price is £3.1million.

Farmhouses
The quarterly figure for farmhouses showed a growth almost unchanged from the previous period, up by 0.6%. However for the year as a whole this sector performed well with an annual growth return of 8.4%. The typical example in our basket is valued at £1,335,700.

An example of a property currently being marketed by Knight Frank in this sector is Hill Farm House, Bransgore, Hampshire - a large detached family house, which enjoys a wonderful, quiet position within the New Forest, with the added advantage of equestrian facilities and a swimming pool. Guide price is £1.3million.

Country cottages
The growth in the price of country cottages slowed in the last two quarters with the final quarter ending 0.7% down. The typical example in our basket is valued at £560,200.

An example of a property currently being marketed by Knight Frank in this sector is Stowe Cottage, Great Comberton, Worcestershire - Grade II listed thatched Worcestershire cottage dating back to 1454. The accommodation is spacious and full of much character and charm. Guide price is £575,000.