Country house market fails to match London boom

The London millionaires’ property boom stops dead in its tracks at the M25, Knight Frank has reported.

The firm says that house prices in the prime country house market have fallen 1.7% in the last year, with most of the fall in the last quarter.

While the number of prime country houses on the market has risen by 24% over the past 12 months, the number of new applicants has dropped by 4%.

Liam Bailey, Knight Frank’s head of residential research, said: “In normal times, the prime country house market would follow the growth cycle set by the central London market, with a lag of around 18 months. London booms, and the luxury country house sector follows.

“But these are not normal times. While London prices have kept rising through 2011, the country house market has stuttered to a halt, in terms of price growth at least.”

He said that while the £1m-plus market in London comprises almost 50% international buyers, for rural properties, the figure is closer to 12%. Outside the main Surrey estates of Wentworth and St George’s Hill, international buyers are a rarity.

However, Bailey said that there has been a rise – of 32% in the past year – in the number of prime country properties going under offer, suggesting that while buyers might be thinner on the ground and unlikely to be rich foreigners, they are serious about purchasing – but on their terms.

Phil Selway, managing partner at Knight Frank’s offshoot the Buying Solution, said the country house market is dominated by ‘over-enthusiastic pricing’ by vendors and purchasers who want to negotiate sharply downwards. He said: “All of this slows the process whilst the battle of wills is played out.”