Price of prime country homes falls

15 September 2008 04:20pm

Prime country homes are sharing the pain of the wider housing market with their prices falling by a record 4% during the third quarter of the year, figures have showed.

Estate agent Knight Frank said the drop was the most severe since it launched its index in 1995, overtaking the previous quarter's new record of a 3.9% slide.

It added that the average cost of top cottages, farm houses and manor houses had now fallen by 7.9% during the past 12 months.

Andrew Shirley, Knight Frank's head of rural property research, said: "Vendors were slower to cut guide prices in this sector of the market, hoping the credit crunch would not affect them. But they have now realised they are not immune to the downturn and are agreeing to lower their expectations.

"Now that the prime sector appears to be in step with the general housing market it will be interesting to see if this continues or whether there is a sharper correction still to come at the top of the market."

Homes at the bottom end of the scale have seen the biggest falls, with cottages losing 11% of their value during the past year, while farmhouse values have dropped by 7.5% and manor houses have seen their prices slide by just 5%.

But the group said at the very top end of the market, manor houses worth more than £5 million had actually seen a slight increase in their price year-on-year, although values had still fallen by nearly 3% during the third quarter.

It added that these so-called trophy properties could suffer their first annual price drop by the New Year.

Knight Frank said cottages had been worst hit because the sales of these properties were more dependent on credit. They have also been affected by a fall in demand for second homes.

But overall, the group said it had seen a sudden upturn in activity during the first half of September, with a rise in sales. It said the increase could be due to sellers pricing their properties more realistically, tempting potential buyers to take the plunge.

© The Press Association