Prime country house prices in the UK rose in 4Q2009

KUALA LUMPUR: Prime country house prices in the UK rose on the average by almost 2.3% in the fourth quarter of 2009 but 2.6% lower than they were at the beginning of the year, according to the 4Q2009 results from Knight Frank Prime Country House Index.

“The price of prime country properties is increasing across the country as the recovery that started in London in the spring of 2009 continues to spread further into the regions,” Knight Frank’s head of rural property research Andrew Shirley said in a statement recently.

He added that there were a number of reasons for the upturn, but the overriding factor is an imbalance between supply and demand.

“Across Knight Frank’s network of country offices, the number of new potential buyers registering with us increased 50% last year and the number of sales grew 28%. At the same time, however, the volume of available property fell by almost a third. What we are seeing is an increasing number of people competing for a diminishing pool of properties,” he said.

Shirley noted that property prices in the Home Counties have shown particular resilience, ending the year 1.4% higher. The north of England and Scotland are recovering more slowly, with prices down 11% on an annual basis, but up 0.5% in the last three months of the year.

He added that potential purchasers are more confident because they feel prices have reached the bottom and are no longer worried about buying into a falling market.

The cost of borrowing remains low and credit availability is gradually improving, he said.

“Around London, we are also seeing an increasing number of overseas buyers returning to the market with the demand for properties over £5 million [RM27.3 million] growing significantly towards the year end,” Shirley said.

Meanwhile, Knight Frank’s head of country department Rupert Sweeting said the best properties are now attracting competitive bidding on a regular basis and guide prices are, in many cases, being exceeded with some houses selling for close to what they would have achieved at the peak of the market.

“We are, however, some distance from a return to the headiest days of the property boom when even properties with issues such as road noise would command premium prices. Buyers do remain price sensitive and it is the houses that tick literally every box that are attracting the most competition,” Sweeting said.

He said the question everybody is now asking is how long the recovery could continue and would prices fall again in 2010.

“Currently, we see few signs that stock levels of the best houses will increase markedly in the New Year and the forthcoming general election could exacerbate the situation further.

“Coupled with the growing number of frustrated buyers looking for houses, this should help to ensure prices do not fall back. The most likely scenario is a levelling off sometime in mid-2010,” he said.

Sweeting noted that there is a speculation that the government’s new bank bonus tax will have an impact on prime property prices.

“This has probably been overstated and, regardless, there is still a large pool of UK and overseas buyers whose purchasing power is not reliant on bonuses,” he explained.