Luxury homeowners could be forced to slash asking prices by 25% or more

09 January 2009 / by Rachel Mason
Owners of luxury homes could have to drop their asking prices by a quarter or more to get a buyer.

According to estate agency Knight Frank, prices for 'prime country houses' fell by 16 per cent last year, with a fall of nine per cent in the last quarter alone.

Knight Frank says it predicts the price falls to be less drastic in the coming year as sellers become more realistic and buyers become more confident.

“The market for prime country property reacted more slowly to the credit crunch than other sectors of the housing market, but all that changed towards the end of last year as vendors looking to sell were forced to adjust their expectations," explained Andrew Shirley, head of rural property research at Knight Frank.

Mr Shirley says that "price reductions of 25 per cent or more may be needed to secure sales of properties that do not score at least eight of 10 against purchasers’ expectations," and that although drops of this magnitude "will be a bitter pill for some vendors to swallow" they are "necessary to get the market moving again", especially at a time where buyers are finding that mortgages are hard to secure.

Rupert Sweeting, Knight Frank’s head of country department added: “Last year was, without doubt, one of the most difficult the market has ever faced, but there are signs that some confidence is returning to buyers."

Mr Sweeting warns that although 2009 will not be easy, vendors are now far more realistic and accept that prices have already fallen quite significantly and that the market is close to hitting bottom, which means price falls this year will be more limited than in 2008.

© Fair Investment Company Ltd