"Average property values fell by 4.7%, compared with 9% in the final three months of last year, according to our prime country house index.
"I think buyers, particularly those with money on deposit at very low interest rates, are certainly starting to perceive that property now offers value for money again, especially in those areas where prices have fallen the most. In the Home Counties, for example, values have fallen by 22.5% from their peak, but have dropped by only 3.7% so far this year.
"It would be premature to rule out any further falls completely, but it does look like we could be very close to the bottom of the market around London and this has been reflected by an increase in market activity in our Home Counties’ offices.
"On an annual basis, prices have fallen the least in Scotland and the north of England and this explains why these areas are now playing catch up, with prices falling by 6.3% in the first three months of the year."
Rupert Sweeting, Knight Frank’s head of country department said: "While it would be wrong to say that the market has started to recover across the board, we are undoubtedly in a very different place compared with the end of 2008. Viewings are starting to approach normal levels and we are even seeing a return to competitive bidding in some circumstances.
"More realistic pricing from vendors and a determination by purchasers to get on with their lives means we are now closer to that magic point where both parties’ aspirations neatly coincide. In March, the number of rural houses sold by Knight Frank increased by 1% compared with the same period in 2008, with a particularly strong performance in our Home Counties and South West regions.
"At the top end of the market, the weakness of sterling continues to attract buyers from Europe, Russia and the CIS who are looking in the country as well as in London."
Have your say on this story using the comment section below