Big bonus payouts among City financiers are seeing prices of top country homes going through the roof.
Prices in the prime country house market have raced ahead at a rate of nearly #900 per day during the past year, figures showed yesterday.
The country house market has grown 10.7 per cent in the year to the end of September – the highest rate since June 2004 – according to the Knight Frank Prime Country House Index.
That follows growth of 2.5 per cent in the third quarter of 2006 to an average price of #1.53 million.
Larger manor houses and properties priced above #3 million saw the largest jump – an average 16 per cent in the past 12 months. That saw the value of these homes surge #875 per day for the past year.
Owners of country cottages, farmhouses and smaller manor houses have enjoyed more modest growth.
Average manor house prices rose 3.1 per cent in the three-months, compared with the previous quarter, and 12.4 per cent in the past 12 months to an average #2.9 million. That equates to growth of #26,671 per month.
Farmhouses experienced growth of 2.8 per cent in the third quarter and 10.8 per cent during the past year, equal to #9,925 per month.
These properties now have an average price-tag of #1.22 million.
Meanwhile, country cottage prices have surged 1.6 per cent and 8.9 per cent in the past three and 12 months respectively. Following growth of #3,583 per month, they now typically command a value of #525,000.
Knight Frank said homeowners were taking advantage of high property prices in London and buying in the country.
Rupert Sweeting, head of the firm's country department, said the health of the service sector economy – in particular, the "wall of money being generated in central London in the City and Canary Wharf" – and a shortage of supply was feeding through to property price growth. "The country house market was pretty flat during 2004 and 2005, and it was only in October last year that we saw the beginnings of the current market boom," he said.
"We expect to see the same phenomenon occurring again as we move into the 2007 bonus round."
Meanwhile Knight Frank said Worcester’s new homes market was one of those which had entered the residential premier league.
The firm says critics have recently doubted the strength of the city’s residential development sector – but in the last year new homes in Worcester have been achieving record-breaking prices per square foot of well over #300.
In addition, they have experienced a 12 per cent price inflation which, rather than deterring buyers, has in fact further boosted demand.
James Wilson, associate at Knight Frank in Worcester, said: "2006 is already proving to be our strongest year to date, with new homes sales exceeding the #18 million mark, and price per square foot values reaching records."
Berkeley Homes’ redevelopment of the Royal Worcester site had opened up a once forgotten area of the city and was breathing new life into the area.