Country house prices fell by 0.3% in the third quarter of 2004, Knight Frank has reported.

The decline comes after strong growth during the first half of the year, which saw prices climbing by over 10%.

The period from July to September, traditionally a quiet time, was notably cooler, with prices for farmhouses falling by 1.2%, prices for manor houses rising by just 0.3%, and country cottage values remaining static.

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Knight Frank has blamed the drop on purchasers’ more cautious attitude, brought about by higher interest rates and increasing affordability constraints, as well as the seasonal factor.

According to the report, the South East still has the highest country property prices, with Surrey, Hertfordshire and Berkshire boasting some of the highest prices, in spite of significant falls. Those looking for a country property on a budget should head to the Borders, the North East or mid Wales.

Liam Bailey, Head of Knight Frank Residential Research, said: ‘The recent weakening in prices relates to the wider slowdown being felt in the UK housing market. The prime country house market experienced a very strong first half of 2004 and some decline in price growth was to be expected.’