Value of country homes back in growth

“The ripple effect of buyer demand is beginning to filter out from London into prime regional markets across the UK”, says Lucian Cook, director of residential research at property adviser Savills.

The UK’s prime regional and country house market has recorded its first average quarterly price rise since the beginning of the downturn, with values up 2% in the three months to the end of September, according to latest data from Savills Research.

Second quarter of growth for South-East
The South-East has shown the strongest growth since reaching the bottom of the market at the end of the first quarter this year, with values up 2.2% in the latest quarter, building on a +1.8% growth from April to June. “This growth has been fuelled by strong quarterly house price growth in the prime suburbs (+3.8%) and prime regional towns (+3.6%) which have caught the first and strongest waves in the ripple effect from the prime London markets” says Lucian Cook.

Commuter and equity rich strongholds favoured
Like London, these are equity rich prime markets which are now being driven by high levels of pent up demand from domestic buyers keen to get on with their lives and strongly influenced by low levels of good property for sale. The top five commuter locations in terms of value growth over the past six months are: Hampshire +9.7%, Berkshire +5.5%, Essex +4.4%, Cambridgeshire +4.3% and Kent +4.2%.

In addition, established prime relocation locations such as Gloucestershire, Devon and Cornwall have seen positive growth this quarter, up +4.4% and +6.4% respectively. Further north, prime towns such as Harrogate and York are just beginning to benefit from the ripple effect, suggesting a recovery curve some six months behind prime central London.

Price growth by location type
A clear buyer preference for quality is emerging with the market continuing to favour the very best properties in the most popular locations. Over the past six months prices for the best 10% of country houses (worth on average £1.4m) have been boosted by over 13%, the bottom 10% by quality (worth on average just £621,000) have lost -4.3% of their value.

But is this growth sustainable?
Lucian Cook believes that it is. “Market conditions are looking more favourable than at any time since the market turned down. Our key demand indicators, such as the number of new applicants, viewings, deals agreed and exchange levels started to rise in the late spring and by the end of September stand at relatively high levels across all prime regions of the UK.”

However, demand is still heavily dependent on cash purchasers and clearly influenced by limited stock. As potential sellers seek to benefit from the improved market conditions, Savills Research expects some of the current pressure on prices to ease over the next six to twelve months.

"We don’t rule out a degree of volatility in the coming year”, says Cook. “But we absolutely stand by our forecasts that the prime markets will see a period of sustained recovery over the next five years.”