Average prime country house prices have risen for the first time in two years with the increase that started in the South East now spreading across the country, according to a new report.
Prices rose on average by almost 1% in the third quarter of the year, the first overall increase since the autumn of 2007, the latest Knight Frank Prime Country House Index shows.
The average price of quality houses in the countryside increased by 0.8% in the third quarter of 2009, compared with a decline of 0.9% in the second three months of the year. The increase was the greatest in the Home Counties where prices rose 2.1% and have now increased for the second quarter running.
In the south west prices increased by 0.6% and central regions saw an increase of 0.7%. But on an annual basis, average prices fell by 13.4% in the 12 months to the end of September. And they are still 20% below their peak in the third quarter of 2007.
‘The positive sentiment that we saw in the Home Counties market last quarter has now started to spread across the UK,’ said Andrew Shirley, Knight Frank’s head of rural property research.
‘A surge in demand and a shortage of quality property on the market is the principal reason prices are increasing. According to our index the best country houses have still proved a better investment since 1995 than the stock market,’ he added.
In August, usually a month of limited activity, the number of houses sold by Knight Frank in the Home Counties increased 85% compared with the same month in 2008. By contrast, the number of houses put up for sale fell by 27%.
‘As long as this imbalance remains I believe that prices will continue to remain steady or gradually strengthen further. The big question now is how much pent-up demand from frustrated potential buyers remains in the system to maintain the momentum. An increase in interest rates or availability next year could dampen the recovery,’ explained Shirley.
Overall the report indicates that the outlook for 2010 is less clear and the prospect of a spring General Election, with the uncertainty that a likely change in political emphasis always engenders, only muddies the waters.