City lure back as country homes drop in price

LAURA MCGUIRE

SOARING interest rates have softened the prices of luxury homes outside of London, according to new data, in a signal that the ‘move to the country’ trend fuelled by the pandemic is showing signs of slowing.

The average value of luxury homes across UK markets outside of London — broadly the top five per cent to 10 per cent of the market by value — slipped 1.5 per cent in the second quarter, according to analysis by estate agent Savills. The figure marks a 3.5 per cent drop year on year, though it is still 12.1 per cent up on the first lockdown in March 2020.

Over the past year, high value housing markets in regional cities saw price falls of 1.4 per cent, while village and rural house prices fell by 3.7 per cent and 3.9 per cent respectively.

It comes after a boom in this market during the pandemic, when many left the city in search of greater space.

“With increasing pressure on buyers’ budgets, committed sellers need to price in a way that reflects the prevailing macroeconomic conditions to achieve a sale,” said Frances McDonald, director in the Savills residential research team.

“But the work-life balance has had something of a reset over the past six months, which has helped underpin values in prime city locations across the country which are now marginally outperforming. Ease of access to transport, work and amenities are once again priorities that trump lifestyle considerations for some buyers.”

It comes during a tumultuous period for the housing market, with prospective buyers burned by the Bank of England’s decision to raise interest rates to five per cent last month, with Zoopla reporting a drop in buyer numbers during the last four weeks.