House prices of £2million properties in rural areas rise by the fastest rate in a decade

House prices of £2million properties in rural areas have risen by the fastest rate in a decade as wealthy people in cities hunt for countryside retreats across the UK.

Homes in the southwest, the Cotswolds and Scotland were most popular as well as luxury properties in Devon, Cornwall, Dorset and Norfolk. 

While countryside homes like these have increased in value by an average of £111,000 (5.5 per cent), a similarly priced flat or house in central London has gone down in value by an average of £8,000 (0.4 per cent) this year. 

Savills researchers believe the change in house prices have come as coronavirus lockdown meant people ‘sought a lifestyle shift and recognised the relative value on offer’. 

The price shifts were recorded in the Savills prime house price index, which notes this year has seen the biggest growth since 2010.  

In the rest of the prime London market (defined as the top five per cent of the market), where £2million would typically secure an additional 1,000 square feet of accommodation and more garden space, gains have averaged £36,000.

‘The unique circumstances of 2020, have led to a surge in market activity at the top end of the housing market,’ says Lucian Cook, Savills head of residential research. 

‘This has supported prices and delivered some unexpected gains, but it hasn’t resulted in runaway price growth.’

Data from TwentyCI shows that the number of sales of properties costing more than £1million that were agreed in the 11 months to the end of November was 29 per cent higher than in the same period last year, despite a significant fall in activity during the first national lockdown. Beyond London they have risen by 43 per cent.

‘The very top end of the country house market, in particular, has had an extraordinary year – perhaps its best since the 1980s, as buyers sought a lifestyle shift and recognised the relative value on offer,’ says Cook.

Overall, prime regional house prices rose by 3.6 per cent in the year, while prime London values rose by an average of just 1.1 per cent.

Mr Cook added: ‘Given the practical implications of Covid-19, the prime central London market has relied on demand from domestic buyers and resident non-doms in 2020. 

‘In light of that, it has held up well but it simply hasn’t been able to match the performance of the regional markets or indeed the leafier parts of outer prime London.’  

‘The unique circumstances of 2020 have led to a surge in market activity at the top end of the housing market.’

Savills believes the country home price increase has been influenced by Chancellor Rishi Sunak’s stamp duty holiday – he increased the threshold from £125,000 to £500,000 from July 8 until the end of March. 

A recent Savills survey of 1,300 prospective buyers and sellers suggested that the stamp duty holiday provided an ‘added motivation’ to buy.  

However, Mr Cook added: ‘But it also indicates that renewed social distancing measures have made buyers more committed to a move over the next 12 months, and that a successful roll out of vaccines will support that further, especially in markets such as central London which have been held back by international travel restrictions.

‘As a consequence, while the uncertain economic and political backdrop is likely to mean the prime market remains price sensitive during 2021, we expect activity to remain relatively strong into the spring and less exposed than other parts of the housing market to a subsequent cooling off, with prime central London looking a ‘buy’ opportunity, particularly for dollar buyers.’