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Prime urban homes outperforming

From Property Talk Live on May 12, 2014

Prime property prices in the country increased in the first three months of 2014, but performance across the country varies widely. Oliver Knight analyses the latest figures.

Prime country houses prices increased by 1.9% in the first three months of 2014, the fifth straight quarter that prices have risen and the strongest quarterly growth in four years.

In the year to March 2014, prime country house prices rose by 4.5%. It is an indication that the prime country market has begun to reap the rewards of the wider property market recovery in the UK, where prices have risen by 9.4% annually, according to Nationwide.

However, our analysis of prime market data shows that price growth is far from even across the market. Increasingly buyers have been attracted to homes located in urban rather than rural settings, with local town and city markets outperforming more rural counterparts.

Across the ‘prime urban’ market, property prices increased by 3.4% between January and March and have risen by an average of 8.2% over the year to March 2014. Recent price growth in Sevenoaks, Winchester, Bristol, Bath and Oxford among others has been reflective of this.

In contrast, price growth for rural properties has been lower. In the first quarter of 2014, prices increased by 1.7% and have risen by 4.1% on an annual basis.

The outperformance of prime urban markets is even more evident on a longer-term basis. Such properties are on average 2.8% below their previous 2007 peak. For rural properties the gap is wider, with prices around 16% below peak levels.

Excellent schools on the doorstep, the convenience of having local amenities nearby, as well as good transport links back to the capital are all big drivers of the prime urban markets, especially for buyers relocating from London who are also able to take advantage of the not insignificant price gap that currently exists.

Rupert Sweeting, Head of Knight Frank Country, comments:
“The continued growth of popularity in towns/cities follows the demands of London buyers looking for a quieter lifestyle with excellent education and good communications to London but coupled with cosmopolitan characteristics such as fine restaurants et al. In effect a similar neighbourhood to that which they experience in London’s borough like Chelsea, Wandsworth and Fulham.”

Across the market, demand for prime country property remains strong, with the number of new applicants who registered their interest in buying a prime country house over the three months to March 2014 up by 10% compared to the same period last year.

In spite of the inclement weather in February, which threatened to make some rural properties inaccessible, viewings were up by 16% over the same time.

This increased demand led to a rise in the number of prime country house sales across the market in the three months to March, which were 21% higher compared to the same time last year.

However, price performance remains dependent on property value. While average values of sub-£2m prime properties climbed by 2.4% between January and March, the value of houses worth £2m+ was lower, with growth of 1.1%.

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Source: Property Talk Live