Average prime country house values in the UK increased by just 0.9% between April and June and annual growth is down to 2.3%, the lowest for two years, according to a new analysis report.
It is an indication that any expectations of a post-election price jump in the prime market were unfounded, says the report from real estate firm Knight Frank.
The report points out that one of the key reasons price growth remains subdued, despite the election of a majority government and the removal of the threat of a mansion tax, is the fact that the prime market is still absorbing the recent changes to stamp duty.
The change, which came into effect in December, has resulted in higher purchase costs for listings worth more than £1.1 million. Knight Frank says there is anecdotal evidence to suggest that some buyers are factoring the increased cost into offers, resulting in some price adjustments.
‘Additionally, while there was a release of pent-up demand in the weeks immediately following the vote as buyers who had adopted a wait and see approach prior to the election returned to the market, rising stock levels, which peaked to their highest level all year in May, helped to mitigate any significant jump in listing values,’ said Oliver Knight of the firm’s residential research team.
He also pointed out that the greater political certainty afforded by the election result means there is a more positive outlook for the residential listing market as a whole. ‘Interest rates remain at record low levels, economic growth is steady and mortgage rates are competitive,’ he added.
Meanwhile, during the second quarter of the year prime city markets continued to outperform more rural locations, with notable price growth in Bath, Bristol and Winchester among others.
Prime urban listing markets are now, on average, 2% above their 2007 peak, while neighbouring village and rural locations remain 13.2% below peak levels.
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Source: Property News Spain