Another fall in prime country property prices

Knight Frank’s GrĂ¡inne Gilmore said: "The value of prime country property fell in the final three months of 2012 taking the annual decline to 3.8%. Prices remain higher than at the last market trough in 2009, but have now been declining for seven consecutive quarters.

"The increase in stamp duty for properties worth £2million and more from 5% to 7% in March has been a major catalyst in a 5.6% annual price fall for homes worth between £2million and £3million, the biggest decline recorded by the index.

"Interestingly, our data shows that prices in the £5millon+ price bracket, which have been fairly resilient so far this year, fell 3.9% 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.

"Regionally, we can see some areas of localised outperformance. Prices in and around Esher are up 3.6% on the year, while prices around Oxford have risen by 3.3%. Homeowners in Guildford have seen the value of their prime property rise by 1.3% over the last 12 months.

"Interest from prospective buyers remains steady, with a 5% increase in viewings in the three months to December. But supply has also risen compared to last year, with stock volumes up 15% in the final three months of the year.

"However, the prevailing feeling in the market is still one of uncertainty with transactions taking longer than they usually would and constrained mortgage lending impacting on volumes. We are forecasting another small dip in prime country house prices next year, with some exceptions in ‘hotspots’ such as Oxford and Guildford, where we expect prices to rise modestly in the next 12 months."

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