Economic uncertainty in the U.K. has weighed heavily on the market for luxury homes in the nation’s towns and countryside, according to a new report.
Country home values were virtually unchanged in the year through September, rising a negligible 0.1%, according to the third quarter prime country house index from brokerage Knight Frank, released Monday. On a quarterly basis, prices fell 0.6% in the three months through September, compared to the prior three months.
Slowing the market are potential buyers, who are increasingly hesitant to make an offer on a country home amid a flurry of factors—which include an increase in the stamp duty on homes over £1 million (US$1.30 million) since 2016, as well as political and economic uncertainty surrounding Brexit.
Those factors have had an outsized effect on luxury homes in the countryside, which have recorded a muted 1% price growth annually since mid-2016, compared to an annual price growth of 2% to 5% in the mainstream U.K. market.
“More uncertainty over the short- to mid-term prospects for the U.K. economy, as well as property taxation, have all kept a lid on growth since 2016. It’s likely that these conditions will persist over the coming year,” wrote Oliver Knight of Knight Frank’s residential research team, and author of the report.
Buyers are taking more time to consider properties, holding back until the right house in the right location comes along. Knight Frank recorded 6.7 viewings for every offer on a luxury country home—the highest that ratio has been in seven years, underscoring the lack of urgency among buyers.
While country homes represent a significant value opportunity for buyers from the capital, the number of Londoners hunting for such properties has also dropped year-over-year, according to the report.
Price cuts are still the surest way to speed a sale in the current market.
“Agents report that properties continue to sell where they are priced to factor in the prevailing market conditions,” Mr. Knight wrote.
Similarly, that old maxim about location continues to ring true amid country properties, where towns near top schools have recorded more robust activity. Such places include Tunbridge Wells, Guildford and Sevenoaks.