Prime Country House Index Q3 2011

Country house prices slip further as London boom halts at M25

With average prices falling by 1.7% over the past 12 months, the prime country house market has struggled to compete with London. A greater reliance on domestic buyers and the domestic economy is the key to understanding the relative underperformance, argues Liam Bailey.
Prime London property has risen in value by 36% since March 2009, but prime country houses are only marginally (5% on average) above their post-Lehman nadir reached in mid 2009. Prime country house prices fell 1.2% in Q3 and are now down 1.7% since September 2010. Outside of the main Surrey estates, such as Wentworth and St George’s Hill, international buyers are a comparative rarity. Where the £1m+ market in London comprises almost 50% international buyers, for rural properties the figure is close to 12%.

In the prime country market, despite the fact that buyers and sellers tend to be wealthier and far more equity rich than the average UK buyer, domestic concerns are the key influences. With the UK economy struggling and wealth creation under pressure, vendors are having to compete keenly on price; anything other than an absolutely perfect property can not be priced ambitiously at the outset.

The flow of buyers coming out of London is helping liquidity in the country house market and with the volume of prime country property going under offer rising by 32% over the past year (three months to September compared to the same period in 2010), there is just the glimmer of hope that London’s surge might push out a little further than the M25 in time.