Will Londoners swap their city pad for a country property?

Tuesday 15th January 2013

With London property prices sky-high, there is a growing trend of Londoners, particularly young families, moving out of the capital in order to get more property for their money.

According to estate agents Knight Frank, demand has been particularly strong for country houses, thanks in part to the fact that prices have fallen in the past year or so.

The average value of prime country property fell in the final three months of 2012 taking the annual decline to 3.8%, according to the latest Knight Frank report. Prices remain higher than at the last market trough in 2009, but have now been declining for seven consecutive quarters.

Residential properties worth between £2m and £3m have recorded the greatest decline in values of late, down by an average of 5.6%, following the rise in stamp duty for properties worth £2m and more from 5% to 7% in March.

In light of the fall in values, Knight Frank’s Country Division report that there was a pre-Christmas rush for homes in the country, with over £250m worth of prime property going under offer in December, with an average value of just under £1.5m, suggesting that more Londoners are now moving to a rural retreat.

Despite the traditionally quiet festive season for property transactions, there was a surge in activity in December, with some Knight Frank offices receiving up to £15m worth of offers in a week

Country hotspots generally include the Oxfordshire, Cotswolds and North Surrey estates like St George’s Hill or Wentworth.

While the property market is incredibly price sensitive and prices have to adjust to market force, the rise in transactions suggests that the first ripples of positive influence from the London market is emerging, with many Londoners opting to cash in on record prices in the Capital and spend their budgets on better value-for-money country properties.

Properties in the £5m plus top-end and localised commuter hotspots are expected to continue to perform particularly well this year despite a fall in values at the end of 2012, as Knight Frank’s Grainne Gilmore explains.

She commented: “Interestingly, our data shows that prices in the £5 million plus price bracket, which have been fairly resilient – prices fell 3.9 per cent in the final quarter. This effectively reversed the gains seen in Q1, Q2 and Q3, with buyers at the top end of the market raising concerns about the implications of recent tax changes and on-going economic uncertainty. Indeed, the Office for Budget Responsibility recently downgraded its forecasts for the UK economy.

“But agents reported that activity levels actually rose as the Autumn Statement and publication of the draft Finance Bill provided the sector with some clarity. This should continue to encourage buyers who have been waiting on the sidelines to commit.”



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