Prime market house prices outside London ‘have increased at fastest rate in decade’

Home buyers are looking for more space both inside and outside a property. Credit: PA

Demand for homes with bigger gardens, multi million-pound country houses and properties by the sea have driven house prices in prime markets outside London up by 8.5% year-on-year.

The increase is the strongest growth since 2010, according to the research from estate agent Savills.

The prime property market generally includes the top 5% of homes by value.

Meanwhile, property price growth in prime central London remains relatively subdued at just 0.5% year-on-year, given ongoing constraints on international travel, the report said.

Within central London, the most robust markets have been Notting Hill, Bayswater and Holland Park, where there has been strong domestic demand for family homes from UK residents, Savills added.

Six-bedroom properties in west and south-west London have been particularly in demand, it said.

More generally across London, the desire for more space means demand for houses has been stronger than for flats.

Savills head of residential research, Lucian Cook, said: “Whichever way you look at it, the past year has been about buyers with the means to do so looking for more space both inside and out, and their willingness to pay a high price for that space".

Demand for larger homes outside London has increased prices. Credit: PA

But there are early signs that some of the urgency is coming out of the market. While it remains a “seller’s market” in many areas, greater price sensitivity is expected over the remainder of the year, according to Mr Cook. A stamp duty holiday is due to be tapered from Thursday July 1. However, the top 5% of the market continues to be fuelled by lifestyle changes among wealthier home buyers, who are often competing for the best homes in a market which has limited stock, Savills said.

It said this has been particularly the case in the prime coastal and £2 million-plus country house markets, which have had annual price growth of 14.6% and 12.9% respectively. Homes in some parts of Britain may still have a way to go to reach their price “ceiling”. In the country house market, values are now around 11.0% above their 2007 peak in the Cotswolds in southern England, but still around a third below their previous high point in Scotland, Savills said. Mr Cook said: “Demand has continued to outstrip supply in many of the most sought-after prime regional markets and this has led to rapid price growth, most notably in markets that had long lagged London in their recovery over the past decade”.