In contrast to the markets of London, the performance of prime regional property has been patchy since the market downturn.
In the last 12 months, prices in this market have fallen by 3%, constrained by caution among predominantly domestic buyers,
in much the same way as the mainstream markets.
Behind this general trend, different property types and locations have reacted differently to changing market conditions.
Within the core, prime regional markets townhouses have held up well across all regions, but particularly the South East. These markets tend to benefit from an element of stock scarcity, particularly for traditional family houses, which has helped to temper major price fluctuations in locations such as Tunbridge Wells and Cambridge and districts such as Clifton in Bristol and Mount in York.
The variation in performance is also evident within the top end of the prime regional market. This is demonstrated by the very different fortunes (see opposite) of four properties that were all worth
£3 million pounds in June 2005.
This shows big variation in the performance of, say, mansions in the most exclusive private estates of the suburban South East, where buyer profiles are similar to those of central London, and prime coastal property in Cornwall, where prices were inflated by bonus money in the boom years of the market.
Both provide evidence of how prices with sub-markets can be re-pegged, either upwards or downwards, because of a change in the buyer profile.
In St George’s Hill, the arrival of international wealth, particularly from the CIS, has reignited the market with 18 sales in the first six months of 2012 generating aggregate sale proceeds of just under £90 million, a figure only previously exceeded in the second half of 2005.
By contrast, in Cornwall, the absence of 30 and 40 something buyers, has caused prices to become re-pegged to the purchasing power of the grey pound. That has played an important part in freeing up the market but has suppressed prices. Though these examples highlight the extremes, they have some relevance for the wider market.
Shaping the top end
The internationalisation of the country house market in the South East is still in its infancy, but is likely to be a factor that shapes the top end of the market over the next decade.
In the shorter term, the rest of the prime regional market is likely to see only relatively low levels of wealth flowing out of London. This will not change significantly until economic growth gives potential buyers the confidence to cut ties with the capital and exploit the wide price differential that has built up over the past seven years between London and the country.
The uber towns of the South East will give the earliest indication of the speed and strength of this change.