Surge in offers as prime country buyers act ahead of rate increases
Buyers outside of London have accelerated their plans, spurred on by rising mortgage rates and a wider sense of uncertainty.
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Prime Country House Index 291.5 / Quarterly price change -0.1% / annual price change 5.9%
The number of offers accepted outside of London hit its highest level for 20 weeks in the seven days after the mini-budget last month, as sellers became aware of rising interest rate expectations.
However, while the escape to the country trend created by the pandemic continues to benefit prime regional UK markets, and transactions are set to remain strong for the rest of this year, we do not expect them to defy economic gravity indefinitely.
With a steady increase in borrowing costs set against a backdrop of higher energy prices and inflation, we forecast average values will come under pressure, falling 5% in the prime country market in 2023.
We set out our thinking in full in our latest UK House Price Forecasts.
For now, the prospect of a turn in the market has accelerated already high levels of activity (see chart).
“The current situation has provided impetus, with people in property chains especially motivated to get deals done and lock in a mortgage deal.
“We’re still getting viewings and things are still going under offer, however it’s paramount in the current market that homes are priced correctly if they’re going to attract interest,” said Mark Proctor, head of the South West region at Knight Frank.
Transactional activity has been high throughout this year despite the end of the stamp duty holiday in 2021, with frustrated demand being increasingly matched by supply. Offers accepted were up 16% in the three months to September versus the five-year average.
The amount of property available to buy outside of London in September was at its highest level since January 2021. While the number of active applicants outside of London in the 12 months to September was unchanged on the previous year.
With supply and demand levels balanced, the average price of a property in the Prime Country House Index has been essentially unchanged for the last two quarters.
This has seen the annual rate of increase ease from 8.2% in the second quarter to 5.9% in the third.
Average prices have climbed 19% since the reopening of the market in May 2020.