Country property market records quarterly price rise
Thursday 5th April 2012
The first green shoots of recovery have been seen in some prime residential markets beyond London which recorded their first quarterly price rise in a year, according to the Savills prime regional index.
Key commuter hotspots, close to London, showed particularly strong quarterly growth of more than 5%.
Average values in the UK index (which measures properties averaging just over £1million) increased by a marginal 0.6% in the first three months of this year. This growth was mainly confined to the South East where values rose by 1.5%, driven by the equity-rich sellers of London homes who started to make the move to the country.
"There was a noticeable increase in buyer numbers from London in the Home Counties this quarter with 43% of buyers coming from the capital in January to March, compared with 36% in the final quarter of 2011," said Yolande Barnes, head of Savills residential research.
"This is a clear sign that the £18billion of foreign private equity that has flowed into prime central since 2007 is now beginning to trigger a migration of equity out to prime markets in the regions. Over the course of the property cycle, its impact will be felt everywhere as it moves out from London and increasingly impacts on cheaper properties."
Crucially, prime regional prices are still on average -17.1% below their former 2007 peak and represent extraordinary value for those seeking to leave London, Barnes believes. Even in the South East, prices are still 11.7% cheaper than they were in 2007.
"Ultra-prime country properties over £2million had been recovering more in line with London prices, although still stand nearly 10% below their former peak. It would appear though that the 7% stamp duty rate has now created a threshold in the market in which properties priced between £2.0m and £2.5m could see some chipping of values or buyers pausing for thought.
"There are clear signs that the falls we have seen in prime markets - even those close to London - are now slowing and that those regions which are traditionally the first to recover after the capital have bottomed out, and are even starting to recover.
"In January, we said that 2012 would present 'unprecedented opportunities' for buyers selling in London and buying in the country and some of them now appear to be taking that opportunity. The price differential between London and the country has opened to its widest ever and this has triggered interest from Londoners priced out of larger homes in the capital."
Annual growth across the prime UK market, like the mainstream market, remains in negative territory at -2.8% year on year, and values are still more than 17% below peak - in contrast to prime central London where they are now some 20% above their former peak. After the Budget, many more Londoners may well wish to avoid the £2million pricing point so a trade out to a larger £1million country house may prove an increasingly attractive option to them.
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