According to residential research expert Oliver Knight from Knight Frank, the Henley branch of which is
According to residential research expert Oliver Knight from Knight Frank, the Henley branch of which is located on Thame Side, average prime country house values rose by 0.9 per cent between April and June of this year.
This an indication that any expectations of a post-election price jump in the prime market were unfounded. Annual price growth slowed to 2.3 per cent — its lowest level in two years.
According to Knight Frank, one of the key reasons price growth remains subdued, despite the election of a majority government and the removal of the threat of a mansion tax, is the fact that the prime market is still absorbing the recent changes to stamp duty.
The change, which came into effect in December, has resulted in higher purchase costs for properties worth more than £1.1 million.
There is anecdotal evidence to suggest that some buyers are factoring the increased cost into offers, resulting in some price adjustments.
Additionally, while there was a release of pent-up demand in the weeks immediately following the vote as buyers who had adopted a wait-and-see approach prior to the election returned to the market, rising stock levels — which peaked to their highest level all year in May — helped to mitigate any significant jump in property values.
The greater political certainty afforded by the election result means there is a more positive outlook for the residential property market as a whole. Interest rates remain at record low levels, economic growth is steady and mortgage rates are competitive.
During the quarter, prime city markets continued to outperform more rural locations, with notable price growth in Bath, Bristol and Winchester among others.
Prime urban property markets are now, on average, two per cent above their 2007 peak, while neighbouring village and rural locations remain 13.2 per cent below peak levels.
But it‘s not all gloom and doom. Over at Hamptons International, James Butler, residential sales manager at the Henley branch in Hart Street, points to the emerging seven-figure market.
“Whilst the market here has been slower than anticipated to take off since the recent election, the pace is gathering momentum with more enquiries coming in for family houses in and around Henley,“ he said.
“According to Hamptons‘ research, it was a record year for £1millon-plus sales in 2014 — 14,000 homes worth a total of £26billion traded hands for £1million or more. That‘s a third up on the 11,000 sales in the £1million-plus price bracket in 2013 and two thirds more than the 8,900 in 2007.
“Growing prices, particularly in London and the South East, have put more homes than ever into seven-figure territory in 2014.
“It is likely that we‘ll see this territory continuing to grow as 2015 continues. House prices are forecast to rise, albeit at a slower pace of four per cent, and we expect the tide of London leavers to continue to push demand into prime markets. The result will likely be more areas outside of the traditional London commuter belt making an appearance in next year‘s list.
“Henley has always been a popular location for Londoners to relocate to given the breadth of lifestyle it has to offer, such as excellent shops and restaurants, the quality of schools both state and private, and the delightful villages and countryside that surround Henley.“
At Savills in Bell Street, Stephen Christie-Miller tells sellers not to lose heart.
He said: “The caution that remains with buyers is as a direct result of the increased stamp duty levies, which may not have been fully realised in the first few months of this year. As the year progresses we anticipate the market will continue to grow in strength.“
And there‘s more good news: Savills Research predicts that house price growth will be strongest in the areas immediately outside London over the next five years.
Over at Strutt & Parker in Pangbourne, local agents have highlighted a possible source of relief for those clobbered by last year‘s stamp duty changes.
The latest budget‘s shake-up of the inheritance tax rules means those with a house worth up to £1million can now pass it onto their family without having to lose some of it to tax.
Stephanie McMahon, head of research at Strutt & Parker, said: “As of April 2017, the inheritance tax threshold will be phased up to increase to £1millon by 2020-21. This gradual raising of the threshold over four years will allow a couple to pass a house worth up to £1million to their children or grandchildren upon death without incurring a tax charge.
“What‘s more, if someone with a £1million house downsizes before they die, their tax-free exemption will stay at the value of the house that they sold — which somewhat reduces the disincentive to downsize.“
About the table (right)
The Knight Frank Country House Index is a valuation-based index compiled quarterly from valuations prepared by professional staff in every Knight Frank Country House office in the UK.
The index is based on the valuation of a comprehensive basket of properties throughout all UK regions based on actual sales evidence.
Knight Frank tracks the performance of three country house property categories: cottages, farmhouses and manor houses.
A typical manor house comprises a large property standing in extensive grounds.
A typical farmhouse has six bedrooms and several acres of land including garden, paddock and barns.
A typical cottage has about one acre of land, is detached, and has four bedrooms.