Price Growth Remains Stable for Prime Country House Market, whilst Activity Levels Pick up in Q2 2017

“A pick-up in sales volumes in the past few months suggests that prime markets outside of London are weathering any political and economic uncertainty as a result of the General Election”. Says Rupert Sturgis of Knight Frank Cirencester, following the release of Knight Frank’s latest Prime Country House Index.

Key headlines:

• Prime country prices rose by 0.1% between April and June

• On an annual basis, property values were 0.2% higher

• Prime properties in town and city markets continued to outperform, rising by 1% in Q2 and by 1.5% annually

• Pick-up in sales volumes suggest prime country markets weathering political and economic uncertainty

• Knight Frank forecasts are for a 1.5% increase in prime prices in 2017

Prime country prices were largely unchanged between April and June 2017, rising by just 0.1%. On an annual basis, property values were 0.2% higher on average, slightly improved from the 0.1% fall reported in the year to March.

But while values have been largely static over this time, an analysis of Knight Frank housing market data points to a more active market, albeit one that remains price sensitive following changes to property taxation in 2014 and 2016. Agents report that against this backdrop it is vendors who are realistic about pricing, or willing to negotiate, that are achieving sales.

Knight Frank figures show prime sales volumes rose by more than half between April and May, compared to the same period in 2016. The comparison flatters this year's performance, as the 2016 data was adversely impacted by the introduction of the additional rate of stamp duty, but even against the level of market activity in 2015, sales volumes were still higher by 29%.

A pick-up in sales volumes in the past few months also suggests that prime markets outside of London are weathering any political and economic uncertainty as a result of the General Election, as well as the ongoing discussions surrounding Brexit.

The figures do, however, also reveal some wider trends. Properties that are located close to good schools and transport links remained the most in demand over the course of the quarter, particularly in town and city markets which outperformed their more rural counterparts.

This was supported by a 1% increase in values for prime town houses between April and June. In comparison, homes located in more rural locations fell in value by 0.2% over this period. On an annual basis, prices were 1.5% and 0.4% higher respectively.

As we have noted in previous updates, a shortage of good prime housing stock continues to act as a barrier to further growth in the market. If sustained, this could put upwards pressure on the market over the remainder of the year. Knight Frank forecasts are for a 1.5% increase in prime prices in 2017.

Comment from Oliver Knight, Research Associate at Knight Frank:

“Prime country prices are broadly flat, up just 0.2% on the year, and 0.1% over the last three months. While viewings data and sales volumes points to a more active market, this is not being accompanied by a rise in prices. Rather, agents report that it is vendors who are realistic about pricing are achieving sales.

“An analysis of Knight Frank housing market data in April and June, covering the period leading up to the election, paints a positive picture in terms of prime market activity. Prime sales volumes, for example, rose by more than half year-on-year between April and May, compared to the same period last year. The comparison flatters this year's performance, as the 2016 data was adversely impacted by the introduction of the additional rate of stamp duty, but even against the level of market activity in 2015, sales volumes were still higher by 29%.”