Prime country property values fell by 0.4% between October and December, the third consecutive quarter in which prices have fallen.
Taxation continues to be the biggest drag on the top end of the market with higher purchase costs contributing to the slowdown in pricing in recent months.
As a result values ended 2016 marginally lower, falling by around 0.4% on average compared with the 12 months to December 2015.
The EU Referendum in June added to a climate of uncertainty over the course of the year, although the direct impact on activity levels has been limited at this stage.
This is underlined by the fact that the number of £2 million-plus sales completed by Knight Frank in 2016 was 9% higher compared with 2015, with nearly 60% of such deals taking place in the second half of the year. November was the busiest month in terms of £2 million-plus transactions since December 2014, our data shows.
Anecdotally, the pick-up in prime activity comes on the back of asking price reductions which have helped align the expectations of both vendors and purchasers.
The sub-£1 million market, meanwhile, continues to attract the lion’s share of demand, accounting for over 50% of transactions in 2016. Properties in this price bracket have been less affected by recent tax changes and accordingly have seen price growth of 3.5% on average over the last 12 months, further reinforcing the two-speed nature of the prime regional housing market.
As we have noted in previous updates, demand remains robust across the market, with a 9.6% year-on-year increase in the number of new prospective buyer registrations in the three months to the end of December, and a 4% increase over 2016 as a whole.
The number of viewings rose by 14% year-on-year in the three months to the end of December.
However, while good prime housing stock continues to attract buyer interest, particularly that which is best in class, and appropriately priced, supply remains tight across the market.
