What a rollercoaster year this has been. But despite the precarious state of the UK economy, the stock market, and the national housing market all highlighted in a telling graph (facing page), painstakingly put together by Liam Bailey, head of research at Knight Frank the country-house market has at least had some pretty impressive high points to offset the dramatic drop in sales volumes and prices seen this year.

To keep things in perspective, a 25-year record of the number of country houses offered for sale in Country Life shows that the situation, in terms of supply at least, was still a good deal healthier in 2008 than throughout most of the 1990s. Edward Sugden of buying agents Property Vision sums up the state of the increasingly topsy-turvy elite property marketplace: ‘A credit crunch, a stockmarket rout and a looming recession do not go hand-in-hand with a booming property market, but the extent of the fall in prices is difficult to gauge in a market with little or no turnover.

To confuse the picture further, there are examples of competitive bidding at the very top end of the market (£10 million-plus) and serious discounts for houses with flaws. For instance, a property on the M4 corridor with some road noise, came onto the market with a guide price of £3.5m at the beginning of the year, and sold for just over £2m in October.’ He adds: ‘Demand for second homes has more or less evaporated, especially in coastal areas of Devon and Cornwall that have been especially hard hit, with sellers who can afford it holding off, and buyers choosing to wait and see. ‘Second homes for non-UK residents are a different matter.

For dollar buyers, prices have effectively halved in the past year, and we are already seeing a substantial increase in interest from Middle Eastern buyers, as happened after Black Wednesday in the early 1990s, when, almost overnight, the devaluation of sterling made London a cheap place in which to buy.’

What a rollercoaster year this has been. But despite the precarious state of the UK economy, the stock market, and the national housing market all highlighted in a telling graph (facing page), painstakingly put together by Liam Bailey, head of research at Knight Frank the country-house market has at least had some pretty impressive high points to offset the dramatic drop in sales volumes and prices seen this year.

To keep things in perspective, a 25-year record of the number of country houses offered for sale in Country Life shows that the situation, in terms of supply at least, was still a good deal healthier in 2008 than throughout most of the 1990s. Edward Sugden of buying agents Property Vision sums up the state of the increasingly topsy-turvy elite property marketplace: ‘A credit crunch, a stockmarket rout and a looming recession do not go hand-in-hand with a booming property market, but the extent of the fall in prices is difficult to gauge in a market with little or no turnover.

To confuse the picture further, there are examples of competitive bidding at the very top end of the market (£10 million-plus) and serious discounts for houses with flaws. For instance, a property on the M4 corridor with some road noise, came onto the market with a guide price of £3.5m at the beginning of the year, and sold for just over £2m in October.’ He adds: ‘Demand for second homes has more or less evaporated, especially in coastal areas of Devon and Cornwall that have been especially hard hit, with sellers who can afford it holding off, and buyers choosing to wait and see. ‘Second homes for non-UK residents are a different matter.

For dollar buyers, prices have effectively halved in the past year, and we are already seeing a substantial increase in interest from Middle Eastern buyers, as happened after Black Wednesday in the early 1990s, when, almost overnight, the devaluation of sterling made London a cheap place in which to buy.’

January 2008

In January, Richard Donnell of Hometrack prophesied: ‘The greatest casualty of the current slowdown will be property transactions rather than house prices, with the annual rate of house-price inflation expected to slow to 1% by the end of 2008, and transaction volumes to fall by 17% over the year.’ In fact, prices would tumble by 30% or more, and transaction volumes by 50–60%.

February 2008

Despite growing doom and gloom, the country-house market was cheered by the announcement of reduced but still generous City bonuses. Good news was already hard to come by, but when Arundel was voted Britain’s best county town in a national newspaper poll, the owners of pretty Georgian River Coppice at Arundel decided to take the plunge and launch the house on the market through Knight Frank at a guide price of £2.25m; it sold in June at a discount of 10%. The Chargot Shoot at Luxborough near Exmoor was the first sporting estate of the year to sell, exchanging for ‘massively’ more than its £4.5m guide price through Strutt & Parker.

March 2008

As prices in the £2m-plus market slowed to a standstill, the market for elite country properties worth more than £4m continued to thrive. Strutt & Parker launched magical Duntisbourne House, near Cirencester, Gloucestershire, on the market in mid March: it sold within three weeks for more than £8m. The launch and very private sale of Turville Court, near Henley-on-Thames, Oxfordshire, at a guide price of £22m through Knight Frank, was the first of 158 major, ‘strictly confidential’ country-house transactions worth £600m to take place behind their closed doors this year. Meanwhile, the open-market sale, through Strutt & Parker, of the 4,600-acre Essex Farms, near Great Dunmow, Essex, to an investment fund for more than the £30m guide price, was the biggest single investment in UK agriculture seen in 2008.

April 2008

Reflecting the growing problems in the City, the volume of country properties advertised in Country Life slipped back to 2003 levels, as country-house prices continued to slide. With the Cotswolds and Devon both slow to get into their stride, idyllic Longparish House on the banks of the Test near Andover was the first major sporting property to come onto the market in Hampshire, through Savills, at a guide price of £9m; by June, it had sold for several millions more. The Blairs bought the late Sir John Gielgud’s former home, The South Pavilion at Wotton Underwood, near Aylesbury, Buckinghamshire, in a not-so-‘strictly private’ deal, for about £5.5m, also through Savills.

May 2008

A post-Easter reality check finally convinced vendors that the credit crunch was more than just a blip in the banking sector, and country-house prices also became more realistic. But deteriorating market conditions failed to deter the launch and sale of some classic English country estates. May saw the launch of the 2,500-acre Tetworth Hall estate in Bedfordshire, through Strutt & Parker at £20m; it sold a month later for more than that figure. Knight Frank and Balfours launched the 995-acre Marrington estate in Shropshire at a guide price of £5.5m; it sold quickly to a local family for considerably more. Wiltshire continued to hold its ground as Knight Frank launched and sold the impeccably restored North Canonry in Salisbury’s cathedral close for about the £5m guide price, the second-highest price ever paid for a house in this much-prized location.

June 2008

As the storm clouds continued to hover over the City, even the top end of the country-house market began to feel the heat. The scenic Blackdown Park estate with its historic Grade II*-listed house at Lurgashall, on the Surrey/Sussex border, was launched in Country Life on June 18 at a guide price of £9m through Knight Frank and Strutt & Parker. It is now on the market at £7.5m. Yet down in Devon, glamorous Redlap House on the coast near Dartmouth was sold by Savills for ‘way over’ the £5m guide price.

July 2008

The annual summer recess came early in the country-house market as activity slowed down throughout the country. Cornish agents Lillicrap Chilcott saw a ‘tale of two rectories’ with the rapid sale of the delightful Trist House at Veryan, after competitive bidding at a guide price of £2.25m, followed by the eventual withdrawal of the buyer shortly before contracts were due to exchange; by the time it came back on the market, previous bidders had all bought houses elsewhere. In the meantime, the sale of the Old Rectory at Ruanlani-horne, also in Cornwall’s beautiful Roseland Peninsula, sold within days of its launch in early June, went through without a hitch at the £2m guide price. Over in South Lincolnshire, Strutt & Parker sold the 784-acre Grange Farm at South Kyme for a ‘top dollar’ £7,000 an acre.

August 2008

Traditionally a quiet month anyway, August was quieter than ever this year. With the second-home market drying up, and trophy houses losing their lustre, Andy Hay of Knight Frank saw the country house retreat to its traditional heartland towns such as Guildford, Hungerford, Oxford, Winchester and Sevenoaks, from where buyers can commute to London with relative ease, and also educate their children. Demand from this quarter resulted in the sale of distinguished Hunton Court, near Maidstone, Kent for £6.2m against a guide price of £5.5m. August also saw the sale of the enchanting Fowberry Court with its unique red-squirrel community at Chatton, Northumberland, through Knight Frank for close to the £2.5m guide price.

September 2008

September was Armageddon month as the full horror of the global economic crisis finally hit home. Yet this was the month that saw the launch onto the market of three £25m country estates: the Kelling estate in Norfolk, which sold to former showjumper Gary Widdowson through Strutt & Parker for slightly less than the guide price; the 2,400-acre Easton estate, also in Norfolk, which sold for close to the guide price through Savills, with Nigel Steele of Jackson-Stops & Staff acting for the Danish buyer; and the peerless Encombe estate in Dorset, which has yet to find a buyer through Strutt & Parker and Savills.

October 2008

October was the month when the country-house market finally fought back. Knight Frank and Savills even found a buyer for Lutyens’ iconic Marsh Court in Hampshire, which had been on the market since January 2007. Jackson-Stops & Staff in Taunton sold several charming country houses in Somerset at prices ranging from £800,000 to £1.5m. The Old Rectory at Rodmell, East Sussex, dubbed by Pevsner the prettiest house in the village, found a buyer in three weeks through Strutt and Parker.

November 2008

Buyers and vendors alike went AWOL in November, hoping that the bad news would just go away. But a few deals were done as buyers living in rented accommodation decided that enough was enough, and it was time to get on with their lives. David Froggatt of Jackson-Stops & Staff in Chipping Campden agreed a sale of a house in the Cotswolds, where all three bidders had been renting for some time. And the farmland market showed its continuing resilience, with the sale of the 1,400-acre Cockayne Hatley estate on the Bedfordshire/Cambridgeshire borders, through Strutt & Parker, at an average price of £6,000 per acre far higher than the average land price being bandied about in the press, selling agent Mark McAndrew points out.

December 2008

The country-house market catches its breath, waiting to see which way the wind will blow in 2009. Although few are expecting to see an early recovery in rural property prices, there is a gentle head of steam building up among vendors who just want to get moving, especially those who have owned their houses for more than five years, and are only missing out on wealth they never had. Buyers are also waiting in the wings, aware that if they wait too long for the market to turn, it may leave them standing by the time they get into gear. One thing is certain, however: whatever happens to property prices in the short term, the purchase of a good country house is likely to prove the best long-term investment anyone will make, at least for the foreseeable future.