BRITISH COUNTRY HOUSE PRICES RECOVER

Country house prices rose for the first time in two years in the third quarter of 2009 analysts reveal. According to Knight Frank, prices increased by 1 per cent nationally for country homes valued at GBP500,000 or more, between July and September. Buying activity was strongest in the Home Counties as London's mini-boom rippled out into the countryside.

Andrew Shirley, head of rural research at estate agency, Knight Frank, said prices have risen 3 per cent in the Home Counties since March 2008. This compares with a modest 0.3 per cent rise in the Midlands and falls of 0.1 per cent in the south west and 5.3 per cent in the north and Scotland over the same period.

City of London finance workers and overseas investors have been venturing out of the British capital's property market into the countryside since last spring.

“You can see the affects of the increases in London filtering out to the Home Counties and then spreading out more generally to the rest of the country,” Shirley said, “More overseas buyers are buying in the posh enclaves of Hampshire and Surrey.”

Prices were rising most strongly for multi-million pound homes, including manor houses, he said. Buyers of these properties paid mostly in cash, so were less troubled by the lack of mortgages which continued to pull the lower end of the property market down, he added.

Many buyers stayed away during the 2008 downturn, but now this pent-up demand was being unleashed on the market he said.

“People who have waited a year, but now have to move for family reasons or other reasons, see now is a good time to get back into the market, because mortgage rates are low, prices are a bit lower,” he said, “that bounce in demand is pushing prices up.”

Jonathan Bramwell, head of country at buyer agency, Prime Purchase, said British expatriates relocating from Hong Kong were buying homes for retirement or close to schools for their children. A country house in the Home Counties had been sold to a Chinese buyer, a sign that the much expected influx of mainland investors had started, he said.

Mr Bramwell said prospects for the country house market were uncertain.

“There is a general election coming up, so the market will go into limbo,” he said, “A Conservative government will be elected and some say this can only be good news for us.”

He advised buyers to hire a British-based solicitor, because they would run a money laundering check on them, which would improve their credibility with sellers. He also recommended buyers get expert advice when choosing a property, so they would know its true value.

Country houses on the market through Knight Frank include Malverleys, a GBP12 million home in Hampshire which comes with parkland, walled garden, swimming pool and tennis courts. The company is also marketing Ashenden, a Grade II listed Georgian house in Kent with 95 acres of land, on offer for GBP4.35 million.

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BRITISH BUYERS BOOST LONDON PROPERTY PRICES

A strong recovery in the prime central London housing market over the past seven months has taken even the most optimistic observers by the surprise. Today, prices are 8 per cent higher in the British capital's most des res areas than in March 2009, figures from estate agency Knight Frank shows.

This rise has been helped by a 2.1 per cent increase in October the company's latest research reveals.

Following six months of strong overseas demand, British buyers came back in large numbers in October.

Liam Bailey, head of residential research at Knight Frank, said values had risen most strongly in the prime central London districts of Kensington, Chelsea and Notting Hill - up 10 per cent since March.

Prices rises have rippled out to other parts of London, including prime areas of Richmond and Islington.

“Prices have done much better than people expected, because there isn't much stock in the market and buyers have come back, because they've felt confident, thinking that London's economy is beginning to turn round,” Mr Bailey said, “The weak pound has encouraged overseas buyers to come back into the market place and the feeling that prices were over-discounted at March this year.”

Mr Bailey said two-thirds of buyers of GBP5 million-plus homes were British, in October, up from two-fifths in the preceding three months. British demand was driven up by the return of City of London buyers to the market he said. City bonuses are being paid again and the stock market has risen in value by 50 per cent since March 2009.

Wealthy foreigners have flocked to London since the spring when prices were 50 per cent below their late 2007 peak in US dollar terms. Buyers include the first mainland Chinese to invest in London's property market.

“European, Middle East and even American buyers are very prominent,” Bailey said, “Hong Kong buyers tend to be more noticeable among investment purchasers, and we've seen, for the first time, mainland Chinese purchases in London.”

He said Chinese buyers wanted property either as an investment or as a place for their children to stay while studying in Britain.

He said a continued lack of supply coupled with strong overseas interest would support prices over the next twelve months. After a quiet period in the market during the autumn, he said prices may edge up 5 per cent in 2010.

“The lack of properties available to buy in the market means it is going to feel quite subdued overt next few months,” he said, “we will have to wait for (next) spring when we are hoping to get more properties back into the market.”

After forecasting a recovery in the prime central London market last spring, Camilla Dell, managing director of buyer agency, Black Brick, is uncertain it can be sustained. Much of the increase in buying activity during the spring and summer was fuelled by the release of pent-up demand from cash-rich Britons living in rented accommodation who wanted a home of their own, she said.

“We are slightly surprised that the numbers are what they are, that we have had such big price growth” she said, “We are hesitant to say this signals a recovery. If we see a lot more supply coming onto the market then we won't see this level of growth continue.”

She considered the national property market may suffer over the next year or so if the economy worsened, but that prime central London's housing sector may be less affected.

“In second quarter of 2010, unemployment is expected to peak at 3 million, so we could see price falls,” she said, “But London is a different animal to the rest of the UK. It will always attract international investors and buyers.”

Ms Dell advised buyers not to delay making a purchase in the expectation that prices might fall again.

“If you can find the right property at a good price then it is worth doing,” she said, “Buyers become too obsessed with price. Buying property in London ought to be seen as a long term thing, because it has a proven track record of attracting international investment.

London's biggest private landlord, Bruce Ritchie, chief executive of Residential Land, which owns 1000 homes in the British capital, is confident London's best addresses will ride out any economic turbulence. He expected investment returns to rise over the next year or two, especially for the best quality homes.

"For a yielding asset the path is only upwards from its current lows,” he said.

Big houses on sale include, 23 Cadogan Place, a GBP26 million city mansion marketed by Savills. This Knightsbridge property has five bedrooms, cinema room, swimming pool, staff accommodation and four terraces.

Islington's emerging prime market was lifted by the official opening of Highbury Square on September 24th. The site, the former Highbury stadium of Arsenal Football Club, was redesigned as 650 apartments and penthouses, and will be completed later this year. Eighty flats remain unsold with prices for a two bedroom penthouse starting at GBP995,000. Sales agents, Savills.

In Paultons Square, Chelsea, a four bedroom, two bathroom period townhouse with several reception rooms, home cinema and garden is on the market through Knight Frank for GBP7.25 million.

At the Barbican in the City of London, former commercial premises have been converted into Frobisher Crescent, a set of 69 apartments, with a three bed home costing GBP1.875 million.

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HOPE FOR MOROCCAN PROPERTY PRICES

Estate agents are excited by Moroccan government plans to increase public investment in the country's economy and infrastructure by 20 per cent in 2010. They hope this will help reverse a 25 per cent drop in property prices since 2008 which wiped out most of the 40 per cent gains made in the five years before the downturn.

Foreign buyers are prevalent in parts of the country like the medina in Marrakech where half of purchasers come from overseas, mainly Britain and France. Renovated medina riads cost from £300,000.

Big overseas hoteliers and developers developing leisure communities in the country attract overseas buyers. Jumeirah Group is the latest. It will manage the Jumeirah Marrakech Golf and Polo Resort, seven kilometres south of the city. Scheduled for completion in 2013, the resort will include 18-hole golf course, three five star hotels, two polo fields, souk, spa, shops, bars, restaurants and 50 villas.

CYPRUS PROPERTY PRICES FALL

In the Greek dominated, independent part of Cyprus, the southern half, house prices have fallen by 10 per cent over the past year, as the property market slump has spread from tourist areas into the wider property market, Cypriot developers say.

Resorts continue to bear the brunt of the downturn most, with prices for holiday homes down by as much as 40 per cent in towns like Limmasol, Paphos and Famagusta.

However, the bottom of the market has almost been reached developers say, which must be good news for estate agency, Knight Frank – it is marketing Akamas Bay Villas, 40 three and four bedroom homes close to the sea at Akamas Peninsula, a UNESCO World Heritage Site and national park.

Each of the Akamas project's modernist-style homes has its own swimming pool. Due for completion in 2012, the site is 25 miles from Paphos airport. The Prices start from CYP1.6 million.

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LONDON'S PROPERTY MARKET BOOM

A north-south divide has emerged in Britain's housing market. London's multi-million pound homes market is surging to new heights with prices above 2007 peak levels in Chelsea. Estate agency, Chesterton Humberts, received 18 bids on a house in that district recently.

London prices are being driven up by strong overseas demand. The weakness of Sterling means British property remains 40 per cent below peak levels for buyers coming from US dollar and euro-linked countries. Most foreigners prefer to buy in London compared to other places in Britain, because that is the city most familiar to them.

North of the Home Counties life is grim for home-owners, however. Many northerners, unable to re-mortgage, are desperate to sell.

Property Portfolio Rescue, a company that specialises in buying homes from distressed sellers, is receiving record numbers of enquiries from the England's North and Midlands regions, up 60 per cent from this time last year.

Nationally, the number of mortgage payers in arrears is 30 per cent higher than twelve months ago, so repossessions will rise, especially in the hard-pressed North, the company says.

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