Rural resilience
Imbalance between supply and demand pushing prices upwards
Results released by the Knight Frank Prime Country House Index during December showed that house prices rose on average by almost 2.3 per cent in the fourth quarter of the year and are now just 2.6 per cent lower than at the beginning of 2009.
For the first time since autumn 2007 every UK region covered by the index reported a quarterly price increase. The Home Counties continue to lead the country house market with Q4 growth of 3.1 per cent and annual growth of 1.4 per cent. A significant imbalance between supply and demand is helping to push prices upwards.
According to Knight Frank the price of prime country properties in now increasing across the country as the recovery that started in London during spring 2009 continues to spread further into the regions.
Overall, prices rose by 2.3 per cent in the final quarter of the year and, on average, are just 2.6 per cent lower than they were at the beginning of 2009.
Property prices in the Home Counties have shown particular resilience, ending 2009 1.4 per cent higher. The north of England and Scotland are recovering more slowly with prices down 11 per cent on an annual basis, but up 0.5 per cent in the last three months of the year.
There are a number of reasons for this upturn in property prices, but the overriding factor is an imbalance between supply and demand. 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.
The question everybody is now asking is how long the recovery can continue and will prices fall again in 2010. Currently, there are few signs that stock levels of the best houses will increase markedly this 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.
