Cheltenham leads prime urban outperformance

Data shows that since the financial crisis prime urban markets have consistently outperformed their more rural counterparts in terms of price growth.

In fact, while property values in town and city markets now stand around 5% above their pre-crisis peak on average, in more rural markets they remain around 12% below such levels.

This trend persisted through 2016, according to the latest research reports from Knight Frank which tracked the performance of property markets in six prime town and city markets in south England.

Whilst prices across the wider prime market were largely unchanged over the course of the year at -0.4%, values in Cheltenham, Winchester, Bristol, Exeter and Bath rose by 7.2%, 5.8%, 5.6%, 5.2% and 3.5% respectively.

Oxford saw a more moderate annual increase at 1.8%, although this follows a number of years of strong growth in property prices following the financial crisis.

Outperformance in prime town and city markets has been driven by the continued demand from buyers for homes in prime urban locations which offer excellent state, private and grammar schools, good transport links and plentiful amenities.

Demand has also been underpinned by a sustained period of low interest and mortgage rates, which has helped boost confidence among potential buyers.

However, while the headline figures indicate that these markets have been buoyant, they have not been sheltered from political and economic events over the course of the year.

Tax remains an issue, particularly for homes valued above £1 million, and the EU Referendum means there has been heightened economic uncertainty. The introduction of a 3% surcharge for buyers purchasing additional homes or buy-to-let properties in April last year, meanwhile, has also had an impact, especially in those markets which historically attract a significant number of discretionary purchasers.