20 Jan Prime country house prices climb 3.4% in 2014
Prime country house prices rose for an eighth consecutive quarter between October and December, the longest run of uninterrupted price growth since 2007, according to the latest figures from Knight Frank.
In keeping with the wider market, price growth in the prime country house market lost some of its momentum in the latter half of 2014. Property values increased by 0.5% during the second half of the year, in comparison to almost 3% of growth recorded in the first six months of the year.
The annual change in prime property prices in 2014 was 3.4%, which Knight Frank says was in line with its initial forecast for the year.
The number of prime country house sales completed by Knight Frank also increased last year; 3% higher than in 2013 and 24% higher than in 2012.
According to Oliver Knight, of the firm’s residential research team, the countdown to the 2015 general election, tighter mortgage lending and the prospect of an interest rate rise, all contributed to slower price growth in the second half of 2014.
‘More restrained price growth in recent months reflects what has happened in the mainstream market, with the Nationwide House Price Index having eased for the fourth consecutive month in December. Any slowdown in the wider market is likely to have an impact on buyer sentiment in the prime markets,’ he explained.
‘In spite of more moderate prices rises, market activity has remained robust. The number of prime country house sales completed by Knight Frank in 2014 was 3% higher than the previous year and 24% higher than in 2012, indicating that demand remains strong,’ he said.
He also pointed out that reforms to stamp duty, announced by Chancellor George Osborne during the Autumn Statement, sparked a flurry of activity in early December as prime property buyers looked to move ahead of the rate change. Under the new rules, buyers of homes valued at more than £937,500 face higher stamp duty charges.
As a result, the day prior to the new rules coming into force, was the busiest day of 2014 for the prime country market in terms of transactions levels. ‘It is possible that the prime sector of the market may take some time to absorb the changes as a result of the higher upfront cost of moving, with harder negotiations between buyers and vendors likely,’ said Knight.
He also explained that prime country house prices are still trading at a large ‘relative’ discount to prices in London, having experienced several years of static or modest growth since the end of the financial crisis and prime prices remain 16% below the previous market peak.
Also, price performance is increasingly dependent on property type. While the average cottage increased in value by 6.8% in 2014, manor houses rose by just 1.4%.
‘We are forecasting average price growth of 2% across the prime country market in 2015, but do not rule out some areas of outperformance, especially in key commuter towns,’ Knight concluded.