The prime regional and country house market remains price sensitive, with average price movements pretty much flat, as they have been for the past four years. Brexit uncertainty continues to be the biggest single constraint on the market according to our agents. This has contributed to a lack of stock being brought to the market which has, in turn, supported values. Prices fell only marginally over the three months to the end of September.

There remains a demand for well-priced stock from needs-based purchasers and those who are taking a long-term view of the market. A rise in registered buyers and viewing activity provides cause for optimism, but buyer and seller expectations need to be aligned for that to translate into activity.

While there has been significant regional variation in price movements since stamp duty changes were introduced at the end of 2014, performance across the regions now appear to be converging. Over the past five years, the markets furthest from London have been the top performers. The prime markets in Scotland continue to be the most robust, underpinned by demand for townhouses in Edinburgh and Glasgow.

Variation by price band

Across the prime regional markets, we continue to see an increase in buyer registrations, which were 24% higher in September 2019 compared with the same month last year. This points to a healthy pool of demand among buyers, despite Brexit concerns.

In the £2m+ country house market, two-thirds of agents cite a lack of stock as the biggest constraint, where values have fallen by just 1.0% during the past year. On average, values of these £2m+ properties are 21.5% below their 2007/08 peak and have fallen 4.1% since the EU referendum. They now look good value in the broader market context.

In the private estates of St George’s Hill and Wentworth, in Surrey, prices have fallen more sharply, down 4.1% in the past year, though such repricing has resulted in an increased level of activity as buyers and developers see value in that market.

Properties worth less than £1m have continued to see values rise since the June 2016 vote and during the past year. Some of the highest levels of annual growth have been in the very established prime urban and suburban markets of Cambridge, Edinburgh and Henley, at times resulting in competitive bidding for well-priced property from needs-based buyers.

Demand at this price point has been underpinned by those relocating for lifestyle or employment reasons and upsizers.

Outlook

We expect the sense of caution in the market to continue for the rest of the year, as buyers and sellers await the outcome of Brexit. The prospect of a general election by the end of the year or early next year is likely to add to this.

Current polling indicates that the election of a hard left majority government would require a substantial swing in voting intentions. This limits the risk of a dramatic change in the political environment. But only once this risk has passed, do we expect the seeds of a recovery to be planted.

We also believe that cuts to stamp duty that were mooted by Boris Johnson in his leadership bid are unlikely. First, it’s uncertain whether the Conservatives can deliver a clear majority. Second, any government is going to be reluctant to put at risk receipts which we estimate to be between £2 billion and £4 billion, at a time when it will be looking to increase spending to support the economy.

Deal or no deal, what is needed to stimulate market demand is greater certainty over the way forward.

Across the prime regional markets, needs-based buyers taking advantage of the relative value compared with London will continue to keep the market moving in the intervening period. Quality will remain key in this cautious market.

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