The country house property market has finally succumbed to the credit crunch…

The country house market remained relatively firm in the final quarter of 2007 with prices falling by -0.04% overall. This is the first price decline recorded since June 2003

Overall prices for country properties rose by 7.9% over 2007. Prices for manor houses were unchanged in the final quarter, although over 2007 as a whole they saw growth of 10.5%

Farmhouses experienced a small increase in value in the final quarter at 0.6% and ended the year 8.4% higher. Country cottages saw the weakest performance with values falling -0.7% in the final three months of 2008, although they showed modest growth of 4.9% over the year as a whole

Market slowdown

Liam Bailey, Knight Frank’s Head of Residential Research comments: “Following the credit crunch in August, it was likely that the end of 2007 would see a noticeable slowing in all residential markets – including the prime markets.

“The country house market was no different and the final quarter of the year saw prices fall back, albeit marginally. We would note that in each of the last 12 years the final quarter has always been the weakest in terms of price growth and we shouldn’t be overly despondent about a fall of -0.04%.

Uncertain economic conditions

Mr Bailey concluded: “As with the top of the London market, prices of the most expensive country houses grew most strongly. Those properties in the over £4m price range recorded growth of 15.1% for the year. Lower down the price bands, properties under £1m didn’t perform quite as well achieving only 8.1% on an annualised basis.

“The uncertain economic conditions in late autumn undoubtedly caused potential buyers to reconsider their purchasing options resulting in the country house market become noticeably less buoyant at the end of the year However, as might be expected the more expensive manor house market performed well with prices 10.5% over the year against 8.4% for farmhouses and 4.9% for country cottages.”