MODERN MASTERPIECES

OPPOSITE
The Grade 1-listed Pulteney Bridge, top left,
The Circle’s ornate architecture, Bath,
below; bucolic bliss in Wiltshire, top right
THIS PAGE, LEFT TO RIGHT
The vista over Edinburgh from the Dugald
Stewart Monument; stately country-house
grandeur in Inveresk, East Lothian
EXPERT’S
VIEW
What’s happening in the PRIME COUNTRY MARKET? Knight Frank’s
Head of UK Residential Research ANALYSES THE EVIDENCE
WORDS by GRÁINNE GILMORE
The architecture and design of the best
homes across the land reflect their
age and location. Location is also key when
it comes to property values, and age plays
a part, but the price band of the home is
becoming increasingly influential in
determining price trends.
Macro-economic and political factors also
sway the market as a whole. The appointment
of a new Prime Minister and Cabinet earlier
in the summer, for example, following political
uncertainty in the wake of the vote by the UK
to leave the European Union, was greeted with
positivity and viewed as preferential to months
of campaigning by Conservative candidates.
Transactions in the prime country market
have continued apace since Brexit, with
evidence of price renegotiations in some
instances. The relative value of sterling has
also been a boon for buyers using dollars or
other overseas currencies to purchase a home,
providing an effective discount on the price
of bricks and mortar. The relative value of
TIM GARTSIDE/ALAMY; PEET SIMARD/GETTY IMAGES; MARCO WONG/GETTY IMAGES
the prime country market compared to
prime London has also resulted in a ripple
effect as buyers move from the capital to
the country, boosting demand. This trend
is expected to continue.
However, the referendum and its impact
on the prime property market cannot be
viewed in isolation. Other policy decisions,
such as four major changes to Stamp Duty
Land Tax levied on the most valuable homes
over the past five years, have also affected the
market. There was a notable surge of activity
in March this year, as buyers pushed through
deals before 1st April – the date of the most
recent levy, an extra 3% duty on additional
homes – came into effect. The market has
absorbed such changes in the past, but it is
usually a process that takes place by degrees,
over a matter of months.
But amid these developments, what has
been happening to pricing in the market? Just
as there is no one perfect country home, there
is no one figure that can fully encapsulate the
The relative value of
the prime country
market compared
to prime London
has resulted in
a ripple effect
prime country-homes market. Our Prime
Country House Index, which has been running
for more than two decades and is compiled
by analysing figures from our surveyors in
31 residential offices across the UK, is one of
the best indicators of the direction of travel
in the market. It shows price growth of 1.3%.
Drilling down below the headline figures,
several distinct trends emerge. Perhaps the
most notable of these in recent years has been
the outperformance of prime properties closer
to urban locations compared to those in more
rural settings. Prices in Cheltenham, for
example, rose by 8.6% in the year to the end
of June (reflecting the market before the EU
referendum vote), while prices in Bath are up
by 4.8% over the same period. Prime price
growth in Edinburgh is also outstripping that
in the wider Scottish market.
Access to schools and transport hubs are
among the attractions of more urban markets,
especially those within commuting distance of
London. While the price differential between
London and country homes has encouraged
more people to make a move from the capital,
in many cases, one or more members of the
household will still need to travel back in for
work on a regular basis.
However, there are some trends that unite
many local markets – and one of these is a
continued lack of stock. The relative decline in
vendors putting their homes on the market
in recent years, particularly in more urban
locations, has underpinned pricing in some
respects. This was especially noticeable in
the months preceding the referendum, when
buyers as well as vendors chose to ‘wait and
see’ rather than enter the fray of the market.
There is also a distinct difference in
performance across price brackets. Again,
some of this can be attributed to the market
having adjusted to higher stamp-duty charges.
In the year to June, the price of prime country
properties worth more than £5m fell by 7.9%,
while those for properties worth £1m–2m rose
by 1.4%, and those worth £2–3m by 1.7%.
It is worth adding that the one thing hard
data struggles to capture is the lifestyle buyers
are choosing when they invest in a prime
country property: it may be a tangible asset,
but it’s first and foremost a home.
2016 19