While overseas wealth has more than compensated for the lack of city bonuses over the last three years, and especially in 2011, it seems to have stuck in London and not spread to the regions. 

While the 2009 rebound has had some impact outside London and in the prime markets, it has not extended much beyond the South East. 

Our prime country house price index still stands -17.1% below its 2007 peak. Prices in 2011 fell – even in the South East. The average fall across the UK was -3.3% with the South West, Scotland, Midlands and the North particularly hard hit.

Price differentials

Price differentials between London and the country have never been greater and we do expect further small price falls in the country this year due to the weak economic outlook but there are signs that the stretched elastic between the two markets may snap back after this.

Our market strength indicator for prime property in the Home Counties (which is usually the first region to move after London) has improved – though is still below former average levels.

We have also seen early signs of greater buyer interest in places such as Surrey, for example. The graph below illustrates how 2012 presents unprecedented opportunities for buyers selling in London and moving to the country.

In 2005, the sale of a prime house in Wandsworth would have bought a prime country house near Wimborne and a third of the proceeds to pocket.

Now, the sale of the same property in Wandsworth will buy two prime houses in Wimborne Minster with 14% of the proceeds to pocket.

Taken from
Residential Property Focus Q1 2012