The escape to the country trend drove annual price growth to its highest level since before the global financial crisis in the first three months of 2021, with prime regional prices up 6.7% in the year to March.
Strong demand for prime property outside of the capital and rural living in general, coupled with tightening supply, saw average prices increase by 2.8% in the first quarter of 2021. This was up from 1.7% in the fourth quarter of 2020.
The higher-value end of the market continued to perform strongly. Buyers have continued to seek more space, greenery and privacy post-pandemic, exploring a new work/life balance that could see many working from home more often after current restrictions end in June.
Country homes valued at £5m and above saw average prices increase by 7.3% in the first three months of 2021, taking the annual rate of growth to 15.8%, with tight supply a contributing factor.
In the twelve months to March 2021, the number of exchanges between £5m to £10m outside of London increased by more than any other price bracket, up 85% versus the previous twelve months to March 2020. UK exchanges (excluding London) were up by 38% in the same period, Knight Frank data shows.
New prospective buyers between £5m to £10m in the country in the twelve months to March 2021 was also the strongest performing price bracket, up 116% on the previous year. This compared with an increase of 39% across all price brackets.
Price growth for higher-value properties has been weaker than the wider market in recent years due to a series of tax changes, leaving greater scope for rises. While prices in England and Wales grew 32% in the five years to February 2021, the Knight Frank £5m-plus index only increased by 6% in that time despite the recent pandemic-fuelled bounce.
However, supply has tightened in recent months (see chart). A combination of concern over new Covid variants and the challenges of home schooling led to pent-up supply as sellers held off during the third national lockdown. This will have delayed some sellers’ preparations for the spring market and supply may start to increase in coming weeks.
Market valuation appraisals were above the five-year average for the first time this year in March (up 5%) and have continued to climb since. Furthermore, the number of viewings in March in Knight Frank’s Country business was the highest since last autumn, and the number of prospective buyers in the same month was the fourth highest amount in the past decade. The number of offers accepted in the Country business in March 2021 was the highest in ten years.
