Country property prices take a tumble

The average price of expensive homes in the country favoured by bankers and other rich Londoners escaping the capital has fallen at its fastest rate for more than a decade.

Knight Frank today said prices fell 3.9% in the second quarter of the year - the most severe drop since it started measuring the value of cottages, farmhouses and manor houses in 1995.

Cottages were down 5.7% and farmhouses lost 4%. Manor houses fell only 1.9% as they continued to attract rich overseas buyers who do not need mortgages.

The slump was a sign the mortgage lending freeze by banks and building societies, which has already hit house prices hard in London, is spreading to the country. Fears about job security and lower bonus payments in the City have also taken their toll.

Liam Bailey, head of residential research at Knight Frank, said: "After a period of static conditions, the malaise in the UK's housing market has finally begun to depress values for prime country houses.

"For the first time in three years, prices fell for all property types, although it was most significant for cottages and farmhouses. These homes tend to attract workers in the professions, who are becoming more cautious in the wake of a more pessimistic economic outlook."