_Key trends from the prime housing markets outside London

Our Prime Country House Index, which has been running for more than two decades and is compiled by analysing repeat valuations from our residential offices across England, confirms price growth of 3.4% over the last three years. Price growth has been steady, and has outperformed the market in prime central London over the same time frame.

Drilling below the headline figures, several distinct trends emerge. Perhaps the most notable of these in recent years has been the outperformance of prime properties closer to urban locations compared to those in more rural settings.

Prices in Bristol, for example, have risen by 7.4% annually while prices in Cheltenham are up by 6.4% over the same period. Price growth in Edinburgh is also outstripping that in the wider prime Scottish market.

Access to schools and transport hubs are among the attractions of more urban markets, especially those within commuting distance of London, although the increasing opportunities for remote working over the last decade has extended the traditional commuter zone for those who can be flexible in the way they work.

The price differential between London and country homes has also encouraged people to make a move from the capital. Nearly a quarter of Knight Frank country home buyers in 2017 who purchased a property valued above £1m made the move from the capital. This trend is expected to continue, especially in light of the more moderate price performance in London.

Politics and policy 

There are pockets of strong activity in the country market, but a combination of macro-economic and political factors mean the underlying environment is more uncertain. 

The prime residential markets in the UK, especially for homes valued at more than £1m, have had to cope with considerable regulatory change over the last five years.

The tally of property tax reforms totals just under 30, covering most noticeably Stamp Duty, but also inheritance, capital gains and non-dom taxes. 

Added to that, a lack of clarity surrounding Brexit and the snap general election earlier this year has led to hesitancy among some buyers and sellers, according to our agents.

Having said that, the prime country market seems to be gaining momentum with a higher number of prime transactions in the first seven months of 2017 compared to the same period in 2016. However, the length of the sales process has started to increase, with evidence of price renegotiations in some instances. 

An added factor at play in the market is the relative value of sterling for buyers using dollars or other overseas currencies to purchase a home, providing an effective discount on the price of bricks and mortar across the UK.

There are some trends that also unite many local markets – and one of these is a continued lack of stock, which is underpinning pricing in some respects.

There is also a notable difference in performance across price brackets. Some of this can be attributed to the market having adjusted to higher stamp-duty charges.

In the year to September, the price of prime country properties worth between £4m and £5m fell by 5.3%, and those worth £2–3m by 1%. Properties worth between £1m–2m rose by 0.2%. 

Outlook

The market will remain price sensitive in the short to medium term, as it continues to adjust to higher rates of taxation and political uncertainty. The strongest markets will continue to be well-connected towns and cities, although this differential is expected to narrow as buyers take advantage of the relative value now offered by more rural markets.

Prime prices in the country remain around 13.6% below the previous market peak back in 2007. Overall, we are forecasting average growth of 1.5% across prime country markets in 2017 and of 2% in 2018.

Knight Frank is one of the most established and trusted agents specialising in exceptional country homes across the UK. Whether buying our selling our dedicated country home department provides expert advice to help you make your move.