The country house sector fell by 4% during the third quarter of 2008 - the most severe quarterly price fall in 13 years
The index has now fallen by almost 8% over the past 12 months, bringing country houses broadly in line with the general housing market for the first time.
However, the most expensive properties remain the least affected with those in the north-east proving the most resilient.
Andrew Shirley, Knight Frank’s head of rural property research said: ‘While cottages are now worth 11% less than they were 12 months ago, manor houses have lost only 5% of their value.
‘At the very top of the market, those houses valued at over £5m are still worth slightly more than this time last year.
'Prices, however, have dropped by almost 3% in the past three months and we could be looking at the first year-on-year fall for these “trophy” properties by the New Year.’
This is to a backdrop which has seen average prices fall by 4% during the third quarter of 2008 adding to the 3.9% slide already experienced in the second three months of the year.
Shirley said that though vendors were slower to cut guide prices in this sector of the market - hoping the credit crunch would bypass them – they are now agreeing to lower their expectations.
He added that the picture across the south of England and Wales is ‘uniformly gloomy’, but the market in the north of England and Scotland continues to bear up, with an annual fall of less than 1% in Scotland and a 5% increase in north-east England.
‘Although it appears that the north-east is bucking the national trend, this area didn’t see the rapid price growth experienced by other regions in 2006 and 2007.
'This means, even without prices falling, it still looks good value to buyers. An extremely limited supply of prime property here is also helping to bolster prices,’ he said.