Prices for country properties have shown a year-on-year increase for the first time in 18 months, shows research from Savills. Transaction levels have also improved significantly from the doldrums of 2008.
In the last quarter of 2009 prices for prime regional property grew by 2.5%, leaving values 1.3% higher at the beginning of 2010 compared to 12 months ago.
‘Clearly stability is returning to this market, but this price growth is modest when compared to other residential markets’, says Lucian Cook, director of Savills residential research. ‘Prime regional residential property has failed to keep pace with either the prime markets of London or the mainstream market of the UK as a whole but this points clearly to a less volatile recovery going forward.
‘The relative underperformance of this market over the past decade points to a stronger capacity for growth during the coming decade compared to the last. In the short term, the less dramatic post downturn price growth should protect this market from the risks of a potential double dip.’
Through much of the last decade prime regional property underperformed the mainstream market. Whereas prices in central London rose by 83% over the Noughties, the value of prime regional property rose by just 59%. The country house and prime regional markets were equally affected by both the credit crunch and the political and financial events of the first half of the decade as prime central London, but did not enjoy the same extent of growth in the boom 2006/07 period.
Over 2009 the highest growth was seen in the markets of the South East which have most strongly benefited from the ripple effect out of London. Prime property prices rose by 4.6% in the region over the year and by 6% in the £1m to £2m price bracket where stock has been most constrained.
Mr Cook adds: ‘We expect this trend to continue over the early part of the next house price growth cycle, not least because this region accounts for 80% of overseas purchases of prime country house and it is here that demand flowing out of the capital is strongest. Other regions will lag but will be similarly sheltered from the volatility we expect to see in the mainstream market as growth occurs.’
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