Savills Vietnam - NEW | Market in Minutes: Prime Country Residential Markets

Buyers and sellers remain cautious due to political and economic uncertainty

Price growth summary

The prime country markets saw no growth over the last quarter, leaving annual growth at just 0.9%. Markets closest to London saw falls over the second quarter of 2017, as the softening values and weaker sentiment in the capital ripples out into its commuter zone.

Stamp duty changes continue to subdue the top end of the market, but a major factor in the falls has been the uncertainty around Brexit and the snap general election, which has led to hesitancy among buyers and sellers.

FIGURE 1Prime growth Political and economic uncertainty mean that buyers and sellers remain cautious, while stamp duty continues to subdue the market

^{Source: Savills Research}

Cities to watch

There is an ongoing trend for urban areas to outperform their rural counterparts as people are drawn to city amenities, transport links and good schools. However, some cities are faring better than others.

Prime Cambridge, for example, has seen particularly fast growth of almost 40% in the past five years. However, values have started to soften over the past 12 months and the country market just outside the city is looking particularly good value.

At the other end of the scale, prime Glasgow and Edinburgh have seen slower rates of growth over the previous five years, at 14.9% and 7.6% respectively, but have maintained this rate of growth more steadily over the last year.

^{Source: Savills Research}

Changing preferences

The country cottage is outperforming the manor house, with annual growth of 2% and 0.5% respectively. This demand for smaller, less expensive, properties reflects the increase in stamp duty for higher-value properties (see below).

Stamp duty strikes

The increase in stamp duty for higher-value properties in December 2014 continues to affect the country market, with properties of more than £2 million seeing annual falls of -1.4% while less expensive properties have maintained growth (below). When sellers set prices realistically and buyers expectations are aligned, sales are progressing.

FIGURE 2Annual growth

^{Source: Savills Research}

Outlook

Our forecast for the prime country market is for continued modest growth by the end of this year as political uncertainty remains. However, now Article 50 has been triggered, by early 2019 we should have a much better understanding of our future relationship with the EU. This is expected to bring a degree of confidence to the market, and is likely to be when we see stronger price growth return. But the price gap between London and the rest of the country remains, and committed buyers are likely to take advantage of this.