A new report has indicated that prime country house prices continue to rise, with tax policy beginning to make an impact at the top end of the market.
Data from an investigation by Knight Frank shows that prime country house prices increased by 0.7% between July and September. Prices for this type of property have now increased for the eleventh quarter in succession.
Yearly growth also increased to 2.7%, up from 2.3% during Q2 of this year but down from its recent high of 5.2% in 2014. As a whole, the market is continuing to feel the impact of the increased cost of stamp duty, following the changes in December 2014.
Latest figures from the Land Registry indicate that between January and July of this year, there were 35% less sales of homes with a value of more than £1.5m outside of London from the same time last year.
The prime market below £1.5m has been less affected by the changes. In fact, prices for homes valued under this figure have grown by almost 4% in the year to September. In comparison, properties over £1.5m have seen a price rise of 2%.
Homes under £1.5m, price growth has been driven by demand for homes in town and city centres. These include regions such as Bristol, Bath and Oxford, where buyers are attracted to features such as good schooling and transport links. There is however a significant differentiation between property prices in the prime country market and in London. Evidence from agents suggests that there is significant demand from purchasers in the Home Counties and in the South West.
Prime country house prices continuing to increase
Prime country house prices are still 14% below their 2007 peak, whereas in contrast, prime prices in London are currently 34% higher than their previous peak values. A surge in prices in the capital during the last few years means that buyers looking to swap city life for one in the country are getting more from their money.
‘With such an imbalance in market values between London and country prices together with the surprise Conservative victory in the general election, we all expected much more activity,’ said Rupert Sweeting, Head of Knight Frank Country. ‘The two stumbling blocks have been the introduction of higher rates of stamp duty which means that at £10m, a buyer may be paying a further £1.2m on top. This, combined with the new tax regime being introduced through the Finance Act has caused many to put on hold their buying plans until they have digested the minutiae of that Act,’ he continued.
‘However, activity is picking up this autumn in the realisation that country property is looking good value and we have seen bidding wars for houses if and when the guide price is at the right level. Looking ahead, with another four and a half years of Conservative rule and the economy looking stronger, we expect activity levels to rise,’ Sweeting added.