Prime country house prices dipped by 0.2% between April and June as uncertainty surrounding the outcome of the EU Referendum filtered through to the market. On an annual basis, price growth over the year to the end of June 2016 eased to 1.3%, down from a recent high of 5.2% in 2014 (figure 1).
There was a softening in demand in the immediate run up to the vote, with potential purchasers awaiting the outcome of the Referendum. The number of viewings conducted in June was 10% lower than the same month last year, and there was also a dip in new buyer enquiries. However, the EU referendum has not been the only factor at play in the market.
Higher purchase costs as a result of two stamp duty increases in the space of 18 months have also had an impact, weighing on price growth in some sectors of the market, most notably for homes valued in excess of £2m.
Average prices for prime country properties above £2m fell by 1.1% between April and June, taking the annual rate of growth to 0.7%. In contrast, properties priced at under £2m recorded an average rate of growth of 0.4% over the quarter, taking the average rate of growth to 3.3%.
The strongest markets continue to be in prime urban locations, where price growth has outperformed that in more rural locations.
All eyes will now turn to the impact of the UK’s vote to leave the EU on the market. There is likely to be a further period of uncertainty as the terms of the UK’s exit are worked out and this has the potential to affect some parts of the market as discretionary buyers weigh up the implications.
However, the primary drivers of this market remain unchanged, with schools and key transport links remaining a draw for town and city markets. Prime prices are still 14% below their previous market peaks on average and, as such, there may be scope for outperformance in the short-to-medium term.
