While prices in the prime London housing market have continued to see strong house price growth, overall prices in the prime regional market rose by a more modest, but still meaningful, 4.8% in the year to the end of March.

Positive quarterly and annual growth was seen across all regions, though annual growth varied from 7.5% in the prime suburban markets such as Esher, Northwood and Loughton to just 0.8% in the prime markets of the Midlands and the north of England.

Commuter heaven

Values throughout the inner commuter zone are now at least back to peak, with those in the outer commuter zone just an average 0.9% off their 2007 levels. In contrast, prime property in the remainder of the south of England recorded annual growth of 5.6% although this still leaves average values -11.0% below their 2007 peak, reflecting the influence of London wealth and earnings.

Prime urban markets have continued to perform strongly, particularly across the south of England on the back of demand from those relocating from London and downsizers.

Prime property in markets such 
as Bath, Beaconsfield, Cambridge, Oxford and Winchester have seen average annual growth of 7.7%, though this has been higher in 
some cases.

A similar but less accentuated trend has been seen in locations further north, such as Chester, Edinburgh and York, with prime urban values across such markets rising by 3.1% over the course of the past year.

In the south of England this has 
fed through to village and more 
rural properties, though price growth remains subdued in the Country House market outside of the Home Counties and hotspots such as the Cotswolds.

£2 million threshold

Beyond these areas there remains a threshold in the market around £2 million, with the market being held back by 
the 7% stamp duty and ongoing talk 
of mansion taxes in political circles.

Signs of improved confidence have also been seen in the volatile coastal markets, where prices rose by 3.3% in the first quarter alone; though they remain well below levels seen in the heady days of 2007.

Click on the images below to enlarge.

Looking forward

As we look forward there are likely to be conflicting forces at work. The high relative cost of prime London property will drive demand to the prime regional markets.

The number of London homeowners looking to buy a property in the country has started to gather momentum, but their attitude towards home ownership has clearly changed. Our recent survey of London residents looking to buy a prime property outside of the capital showed that 45% were also looking to retain at least a foothold in London.

Other buyers are likely to respond to an improvement in the economy that 
 is already supporting the recovery 
in the mainstream housing market.

However, price growth is likely to be limited as the debate around the taxation of high value property hots 
up in the run up to the next election.

Moving house is a big decision and what motivates buyers to move depends on age, location and price bracket. Yet across all demographics, there is one clear reason which matters to home movers, and that is quality of life. Over 90% of respondents to Savills prime buyer survey chose this as the reason to move, no matter whether they are looking for a rural or urban environment.

For additional survey findings and in-depth analysis, see our Spotlight: Prime Regional Residential Markets (Spring 2014).

Taken from
Market in Minutes: Prime Regional Residential Markets - April 2014