Prices of country properties across the U.K. have fallen for three straight quarters, slipping 0.4% between October and December year-over-year, but there were signs of increasing demand despite the price decline, according to a report released Tuesday.
Throughout 2016, U.K. country properties lost 0.4% value on average compared with the previous year, according to the Prime Country House Index compiled by Knight Frank, a London-based global real estate consultancy.
The index tracks three types of country properties: manor houses, cottages and farmhouses. Cottages fared best in 2016, with prices increasing 4.1% over 2015. Prices of farmhouses and manor houses dropped 1% and 2.5% respectively.
"Taxation continues to be the biggest drag on the top end of the market with higher purchase costs contributing to the slowdown in pricing in recent months," Oliver Knight, a researcher at Knight Frank, said in the report.
Starting April 1, the U.K. raised by 3% the stamp duty on purchasing second homes over £40,000. Those buying properties worth more than £1.5 million, meanwhile, have to pay 15% of the price in tax instead of 12%. For a £2 million property, that means the buyer has to pay an extra £60,000 in taxes.
More:U.K. Prime Home Buyers Trimmed Budgets After Stamp Duty Hikes
However, sellers seemed to have made concessions in light of weaker demand, as the number of £2 million-plus sales in 2016 rose 9% compared with the previous year. Nearly 60% of such deals were completed in the second half of the year following the stamp duty increase, according to Knight Frank. In addition, November saw the most transactions of £2 million-plus country properties since December 2014.
A high-end manor house normally refers to a large property standing on extensive grounds. A typical prime farmhouse has six bedrooms, several acres of land including garden, paddock and barns. A typical high-end cottage, meanwhile, is on one acre of land, is detached, and has four bedrooms.
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