Country houses in the Home Counties are the latest beneficiaries of a recovery in the housing market, with values rising at their fastest level for six years.

Rural homes of the sort favoured by City commuters leapt in value by 12.6 per cent in the past year, according to figures from Savills, the property agents.

For the most expensive country houses, above £5m, prices have soared by 19 per cent, outstripping the rate of national house price increases, currently at about 6 per cent. Values for country houses across the UK rose by a more modest 7.6 per cent in the same period.

The figures underscore how the market has become polarised. Prices are rising rapidly in central London and wealthy pockets around the capital, buoyed by City bonuses and overseas interest.

Strong growth is also being experienced in Scotland and Northern Ireland, which were latecomers to the recent boom.

Prices in many English regions, however, have trodden water in the last couple of years amid fears that many people have been struggling to meet prices.

The south-east, which makes up only 8 per cent of Britain but accommodates about a quarter of its population, is under the strongest price pressure from a demographic point of view.

"For the prime market in the Home Counties there is still a significant imbalance in the supply of housing for sale and demand - in particular for houses," said Yolande Barnes, head of residential research at Savills.

Ms Barnes said the phenomenon was the direct consequence of giddy house price growth - 17 per cent in a year - in the most exclusive streets of central London.

"There is a shortage of high-quality family houses in good locations for people to buy but that doesn't stop people wanting to buy them," she said.

Alexander Hunt, head of London and Country Houses at Cluttons, said there had been a great demand for country homes within commuting distance of London during the long summer.

However, the market had turned a "little quieter" in late September with more owners willing to sell.

The increasing strength of the housing market, albeit in a few exclusive areas, has raised fears of another interest rate rise later this year.

A quarter-point increase in the cost of borrowing in August has failed to stem demand for residential property, say many observers.

If anything, it could strengthen, said Paul Smith, chief executive of Haart estate agents.

"The autumn market looks set to be strong and we expect activity levels to increase in the run-up to Christmas as people will be looking to move and get settled in time for the New Year," he added.

Source:  Financial Times