Price growth in the country market moderated in the third quarter of 2021, but a shortage of properties for sale may insulate prices from significant decline over the winter, says Knight Frank in its latest prime country house index analysis.

In the three months to September average price growth was 2.1%. While this was the weakest quarterly rate this year, it compares to 2% in Q3 2020 during the stamp duty holiday and remains significantly above pre-pandemic levels.

It may, however, be an early sign that the ‘escape to the country’ momentum is peaking.

The quarterly increase pushed the annual rate of growth market to 10.6% in September, which is the highest level since the first quarter of 2007 (see chart).

“After a remarkable period of activity some of the heat has come out of the country market as we move into autumn. However, the return to normality will likely be a slow process with demand still significantly outstripping supply, a situation that is unlikely to improve significantly until next spring,” said Chris Druce, senior research analyst at Knight Frank.

Knight Frank’s Country business set new records for the number of exchanges in March 2021 and then, following the extension of the stamp duty holiday, in June this year. Coupled with a huge surge in interest in rural living after successive lockdowns, finding buyers has not been a problem.

However, the national lockdown at the start of this year delayed supply coming into the spring market, and with heightened activity throughout 2021 demand has continued to outpace supply. The ratio of new prospective buyers (demand) versus new instructions (supply) climbed from 11.6 in August to 13 in September. The ratio is the highest it has been in more than 8 years.

With supply tight, some prospective sellers held off as they have been unable to find purchase options for themselves in a frenetic market, which has exacerbated the problem as discretionary sellers at the top choose to wait.

While it took on average 144 days for an offer to be accepted in September 2019, this had come down by more than a third (37%) to 91 days in September 2021.

The number of viewings held before an offer is accepted was 16.8 in September compared to 21 two years ago.