Prime country property prices in England and Wales remained broadly flat in 2017, with a 0.4% rise during the year, after a 0.2% fall in the final quarter, the latest index shows.
However, demand has remained steady over this time, with Knight Frank figures showing a 1.2% increase in the number of new prospective buyers registering their interest in buying a home between January and November.
There was also a 4% increase in the number of viewings conducted over the same period and the index report says that while this may only be a marginal rise, it has come against a backdrop of uncertainty.
The report also says that there were 6.8% fewer homes worth over £1 million launched onto the market so far this year compared with 2016 and Knight Frank is forecasting price growth in prime markets across England and Wales of 1.5% in 2018.
It explains that the modest rise in demand has also coincided with a lack of new stock being offered for sale and agents reported that this has been one of the most challenging aspects of the market in 2017.
Higher rates of stamp duty, a slowdown in economic growth and wider political uncertainty mean that vendors adopted a wait and see approach and the East Midlands, the West Midlands and Yorkshire were the only regions to see an increase in the number of £1 million plus homes put up for sale in 2017 compared with the previous year.
In the South East, which is usually home to the highest number of £1 million plus sales outside of London, there was a 9% fall in new prime listings.
Knight Frank sales volumes outside of London rose by 4.9% year on year between January and November 2017, however the report notes that any continued decline in stock levels at the top end of the market could weigh on transactions into 2018.
‘Overall, we are forecasting price growth in prime markets across England and Wales of 1.5% in 2018 and of 2% in 2019. Town and city markets, which have been the strongest performers over the last few years both in terms of price growth and activity, are expected to post some outperformance in the next year or so, but the relative value now offered by more rural markets could mean we start to see a reversal of this trend as the forecast period progresses,’ the report concludes.