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Prices rise for prime south-east houses The Financial Times July 09

The value of prime country homes has begun to rise again in the home counties as the return of bonuses is again inspiring confidence in typical buyers among City financial institutions.

Prime country homes rose by 0.8 per cent in the south-east of England in the second quarter of 2009, according to Knight Frank, the property company, but was the only market sector with signs of growth.

Overall, prices for prime country houses dropped on average by about 1 per cent, much less than the 4.7 per cent fall in the first three months of the year. Average prices have fallen by 17.5 per cent in the 12 months to the end of the second quarter.

Andrew Shirley, Knight Frank’s head of rural property research, said: “Ironically, it appears that London, which initially looked like it was going to be hit hardest by the credit crunch, has recovered in confidence the quickest. Well-paid City workers now feel more secure in their jobs and sizeable bonuses already seem to be back on the agenda.”

This effect, he said, had rippled out to the home counties, and prices have also increased in the Cotswolds, according to Knight Frank, where many Londoners buy second homes. Average values around Knight Frank’s Cirencester office rose by 3.4 per cent in the past three months.

Prices are recovering most quickly for smaller properties, with the average price of a cottage falling by just 0.4 per cent. However, the rarest and most expensive houses seem to be bucking the trend, according to Mr Shirley, with the price of houses of more than £5m recording a 2.2 per cent increase.