Savills’ latest research has found that overall growth in the prime country house market stood at 11.8% in the twelve months to June this year, a figure slightly above that of the mainstream market in the UK. This growth reflects that market conditions have remained buoyant, says the agent, partly on the back of constrained supply at the beginning of the year.
However, the agent also points out that these overall statistics have the effect of masking a much stronger performance at the top end, where market dynamics are much more akin to those in prime central London : ‘The top end of the prime country house market displays similar characteristics to prime central London, with a large pool of wealth chasing a constrained level of stock,’ says the report. ‘As a result, annual growth in the period to the end of June 2007 was 15.1% in the £2m plus market.’
However, it is usually in the £5m plus bracket where the most remarkable growth is seen, as these buyers are not subject to the effects of changes in the general economic climate. Annual price growth in this category now stands at 24.1%, well ahead of the rest of the country house market, confirms the report.
‘Demand at the top end has been exceptional, but remains discerning,’ it states. ‘Large character properties which offer sufficient land and ancillary accommodation to meet potential purchasers’ requirements for privacy and amenity remain limited. This underpins values for this type of housing.’
On a regional basis, the area to benefit most from the surge in prime central London has been the Home Counties, as demand filters out of the capital, and remains constant from those requiring access to the capital. As a region it continues to show the highest levels of country house price inflation within England (with annual growth of 15%).
The South West also shows ongoing growth, says Savills, with demand for second homes continuing to fuel ‘extraordinary localised house price growth’, particularly in coastal areas.
Meanwhile the Scottish market continues apace, with an overall annual growth rate of 16.8%. The majority of demand here is driven by the market in and around Edinburgh, Glasgow and the central belt, as well as from buyers looking to get more for their money than they would elsewhere.
The forecast looks good for coming months in these markets despite interest rate increases, according to Lucian Cook, director of residential research at Savills: ‘With interest rate rises prompting a slowdown in the mainstream market, it is important to consider how this will effect prime country houses,’ he said.
‘Because the prime country house market demonstrates the characteristics of both the mainstream market, and prime central London we expect interest rates to have different impacts in different price bands. We expect the most valuable properties to be most insulated from increases in interest rates. Taken as a whole, whilst a higher interest environment may cause growth rates to slow in the next two quarters, we consider that any fall in growth rates will be tempered by continued high demand, and continued growth at the top end, where scarcity is a more dominant factor than affordability.’
As a result the report says it believes the country house market will continue to outperform the mainstream market, albeit with potential for a temporary fall in the Autumn as HIPs are introduced for properties of four bedrooms and above.