Prime country house prices lose momentum in last six months

James Way
James Way

Price growth in the prime country house market lost some of its momentum in the latter half of 2014, with property values increasing by just 0.5 per cent during the second half of the year.

The countdown to the general election, tighter mortgage lending and the prospect of an interest rate rise, all contributed to slower price growth in the second half.

More restrained price growth in recent months reflects what has happened in the mainstream market, with the Nationwide House Price Index having eased for the fourth consecutive month in December.

Any slowdown in the wider market is likely to have an impact on buyer sentiment in the prime markets.

In spite of more moderate prices rises, market activity has remained robust. The number of prime country house sales completed by Knight Frank in 2014 was 3 per cent higher than the previous year and 24 per cent higher than in 2012, indicating that demand remains strong.

James Way, head of Knight Frank’s Stratford office, said: “Whilst many people have a fear of an election, history suggests that property transactions continue at the same pace. Sellers should take advantage of a lack of fresh houses to the market by marketing in the first four months of 2015.

“With the American economy in full recovery mode we may see an influx of American buyers taking advantage of this upturn and the strength of the dollar.”

Reforms to stamp duty, announced during the Autumn Statement, sparked a flurry of activity in early December. Under the new rules, buyers of homes valued at more than £937,500 face higher stamp duty charges. As a result, December 3, the day prior to the new rules coming into force, was the busiest day of 2014 for the prime country market in terms of transactions levels.

Knight Frank is forecasting price growth of 2 per cent across the prime country market in 2015.

Mr Way added: “It is possible that the prime sector of the market may take some time to absorb the changes as a result of the higher upfront cost of moving, with harder negotiations between buyers and vendors likely.”