MARK PALMER: 'Once upon a time, you would see muddy old Land Rovers parked in Chipping Camden, now it's all shiny Porsches and Ferraris.' As demand for Cotswold houses plummet, with prices down by 12 per cent, has the bubble finally burst?

Alice de Courcy and her husband, George Connor, live with their two small children, a pair of Shetland ponies, a whippet and a spaniel in a picture-postcard Georgian house with seven bedrooms.

It's set in several acres of gardens and paddocks in the village of Compton Abdale, near the historic market town of Northleach, in the heart of the Cotswolds, the most fashionable stretch of countryside in Britain.

As the summer sun glints off the sash windows and the ivy that clads the walls rustles in a light breeze, it's hard not to view this gem of a property as a little bit of heaven.

But all is not as it seems. Alice and George put their home on the market two years ago for £3.5million but, despite retaining the services of the very pukka Cotswold property specialists Butler Sherborn and dropping the price to £2.85million – a reduction of more than 20 per cent – it obstinately refuses to sell.

'We had a flurry of new interest when we reduced the price but it has gone quiet again,' says Ms de Courcy, who works in marketing for a tech firm. 'We are trying to do all the right things and have even put in a whole new drainage system at a cost of £60,000.'

All to no avail. The fact is that a chill wind is blowing through the Cotswolds' property hotspots, or, as one long-time local resident puts it more dramatically: 'The bubble has burst – as we always knew it would.'

The evidence suggests she is right. A report from prime and super-prime estate agents Savills reveals that, while Cotswold house prices rose by nearly 5 per cent during the so-called 'race for space' generated by the Covid pandemic in 2021 and 2022, they have since fallen by 12 per cent, with demand down by up to 50 per cent.

This would appear to be largely due to a perfect storm of economic factors.

The cost of living is hitting people hard thanks to stubbornly high interest charges and an inflation rate that remains above the target level.

Meanwhile, Oxfordshire and Gloucestershire are charging double council tax on second homes, companies are no longer keen on employees working from their sitting rooms and VAT on school fees has squeezed people's budgets.

Then, there's Stamp Duty, which on a £1,000,500 house in the Cotswolds, comes to £96,250 – rising to £181,250 if it is a second home.

It all adds up to a heady cocktail that's bound to give even the wealthy a financial hangover.

Still, with its honey-hewed houses, outrageously pretty villages and undulating countryside, what's not to like about an area so prosperous it's known as 'Notting Hill-on-the-Wolds' after the exclusive west London enclave?

'Silly prices, clogged roads, ghastly people – I could go on,' says Miranda Murray, a retired teacher in her late 60s.

'Please do,' I tell her.

'Frankly, it's been ruined, mainly by urban types who have no real interest in the countryside – weekenders and celebrities who think a pair of wellies is some sort of decorative feature to put near the back door.'

Miranda Murray is not her real name ('Put me in the paper and I'll kill you') but what makes her strident views about this rarefied part of Oxfordshire and Gloucestershire, some two hours drive from London, so arresting is that she has lived here for more than 40 years.

Deep down, of course, she loves the Cotswolds, which is why she hates what she thinks it has become.

She is not alone. Another Cotswold veteran who lives near the sprawling Soho Farmhouse members club (which is nothing like a traditional farmhouse – unless you know of one with a cinema, yoga studio, Olympic-sized swimming pool and offering IV drips and hyperbaric oxygen therapy), says: 'Something has gone badly wrong. Once upon a time, you would see muddy old Land Rovers parked in Chipping Camden, now it's all shiny Porsches and Ferraris.'

Buying agent Charlie Parkin says the problem is that 'the Cotswolds has become something of a London suburb or even a sort of Chelsea in the countryside – far too chi-chi and in many ways it's gone out of fashion'.

The family pictured in the stunning gardens of their property 

Which is counter intuitive given the influx of celebrities to the area, who ostensibly have made it one of the most fashionable regions in the country – somewhat similar to the Hamptons, the glitzy bolthole for wealthy New Yorkers in America.

But fashionable and desirable are two different things. Not everyone – even if they have the dosh – wants to reside in an area where, increasingly, the rich and famous live in houses cut off from the rest of the world by electronic gates and watched over by elaborate security cameras.

David and Victoria Beckham, who own a nine-bedroom house with an outdoor swimming pool near Great Tew, are a case in point.

Then there's Liam Gallagher, Kate Moss, Lily Allen, Claudia Winkleman, Hugh Grant and a growing number of moneyed refugees fleeing Donald Trump's United States.

Indeed, if it weren't for Americans the crisis in the Cotswolds would be even worse than it is.

International buyers represented just over a fifth of sales in the Cotswolds of houses priced above £1.5million last year, with North American buyers accounting for 13 per cent of all sales, almost four times the 3.5 per cent long-term average.

But at least one American couple who bought into the Cotswolds dream have discovered that even they are not immune to the current downturn.

In 2024, Ellen DeGeneres, the American comedian and talk show host, and her wife, Portia de Rossi, bought Kitesbridge Farm in Swinbrook in Oxfordshire intending to use it as a holiday home.

They paid some £15million for the 16,600 sq ft farmhouse – about £3million above the asking price – and then spent vast sums on it before putting it back on the market a year later for £22.5million with Sotheby's. There have been no takers.

Where does this leave those with far smaller budgets who are desperate to sell? Desperate, is the appropriate word.

A retired couple from Wales, who do not wish to be identified, bought their three-bedroom, Grade 2-listed cottage in Taynton, near Burford, for £2.15million in 2022.

A four-bed semi-detached house for sale on Bishops Walk, in Whiteshill, Stroud. The guide price is £399,995

Pictured: Meadow Bank Barn, Ascott Under Wychwood, on sale with a guide price of £825,000

'We always wanted to live in the Cotswolds and were aware that we were buying at the peak of the market but it didn't matter at the time because it was going to be our forever home,' says one of the couple.

But, then, her mother back in Wales had a stroke and her husband's mother, also in Wales, was diagnosed with dementia.

'It was obvious we needed to return to Wales and so we put our house on the market for £2,000,350 – but it wouldn't sell. And that was despite having 11 million views on social media.'

So the price has now dropped to £1,999,950, bringing it just under £2million so that a future buyer will be spared paying Chancellor Rachel Reeves's dreaded mansion tax in two years' time – if the new PM sticks with this policy.

'Knowing that we are going to make a loss on the house is a bitter pill to swallow but there is no alternative,' she says. 'It was a seller's market when we bought the house and now it's a buyer's market.'

Attracting the right kind of buyer might be a problem but luring tourists is no problem at all.

The Cotswolds have even attracted a visit by Trump's right-hand man, his Vice President JD Vance, hardly the most popular of politicians, who took a holiday last summer at Dean Manor, an 18th century pile not far from the country home of former prime minister David Cameron and his wife Samantha.

But some argue that the sheer number of day-trippers descending on picturesque towns and villages, such as Bourton-on-the-Water, Burford, Stow-on-the-Wold and Bibury, has got out of hand.

Then there is the Daylesford juggernaut, which trundles on – or, rather, continues its seamless colonisation of the Cotswolds, with its swished-up pubs with rooms.

All are a short distance from the cathedral that is Daylesford Organic, once a simple farm shop, now a retail emporium, with a spa, restaurants, garden centre et al.

Worshippers flock there in such huge numbers that the overflow car park was overflowing on my visit this week.

But nowhere is the day-tripper issue more of a problem than in Castle Combe, home to just under 400 people.

A five-bed detached house for sale in Preston Leigh, Siddington, Cirencester, Gloucestershire. The listed guide price is £1,100,000

A property in Broadwell, Moreton-in-Marsh, Gloucestershire on sale with a guide price of £5,850,000

Pictured: The sprawling interiors of the Broadwell property 

Often referred to as one of the 'prettiest villages in England', Castle Combe is visited by tens of thousands people a year, some of whom come over from China or Japan expressly to be photographed in full wedding regalia, with a chocolate box cottage as the backdrop.

Some of them even come equipped with drones, which has led to a number of embarrassing invasions of privacy.

'Somebody was sitting in his bath, looked out the window and there's a drone filming him,' says Fred Winup, chairman of the Castle Combe Parish Council. 'I've sat in my garden and there's been a drone flying 10 feet above my head. Villagers don't like drones flying over their gardens and looking in their windows.'

Which is understandable. What's not so clear is what the future holds for the Cotswolds. Has the bubble really burst? Or has the bubble just morphed into one over which no one has control.

Estate agents, normally the masters at painting a positive picture however dreadful things may be, are struggling to apply the gloss on this occasion.

'Although the market [in the Cotswolds] has normalised from the intensity of recent years, interest remains steady from local, national and international buyers,' says Plum Fenton, a Savills director.

Steady? Really? But, then, Ms Fenton goes on to say that 'when quality aligns with value, [buyers] are prepared to act decisively, particularly for period homes offering secondary accommodation, acreage and amenities'.

In other words, the reason why demand in the Cotswolds has plummeted is, in part, because sellers have inflated ideas about what their properties are worth – and some agents don't dare contradict them.

'There's a disconnect between vendor expectations and where the market is in reality,' says Max Douglas of Maxwell Douglas estate agents, in Chipping Norton. 'The fault lies with vendors who won't take our professional advice'.

Hence a proliferation of 'For Sale' signs and widespread reductions across the whole area in an attempt to get prospective buyers through the door.

Manor Farm House, in the village of Broadwell between Stow-on-the-Wold and Moreton-in-Marsh, comprises a main house and two additional cottages. There are in total nine bedrooms, eight bathrooms and six reception rooms, with gardens designed by RHS Chelsea Flower Show winner Richard Miers.

It went on sale last year with a guide price of between £6.5million-£7million while on the books of The Country House Department – but has been slashed to £5.85million after the vendors switched to the Burford-based agents Radnor Martin.

'I've always tried to be realistic about prices,' says Radnor Martin's founder and CEO, Emma Branch. 'But some agents are so desperate to win business that they come up with ridiculous guide prices. The last thing I need is over-priced houses that aren't going to sell.'

There are plenty of those. But it's not just a price issue.

Sam Butler, of agents Butler Sherborne, says: 'I just wish vendors would take our professional advice and accept where the market is right now.'

And Lindsay Cuthill, founder of the upmarket Blue Book agency, which operates nationwide, says that almost every property in the Cotswolds has come down in price – but that the problem is a far wider one.

'Stamp Duty is the big hurdle. It stops spontaneous buyers in their tracks. People might want to downsize but the cost of moving is just too much,' says Mr Cuthill.

'What we need is a government with a clear five-year vision rather than flim-flam that gives no one any confidence. But there's no sign that will happen any time soon.'

Meanwhile, Alice de Courcy is left wondering whether prospective buyers have been put off by the lack of a swanky coffee shop within easy walking distance.

'Perhaps if they come from London, they expect everything still to be on their doorstep,' she says. 'Others have asked things like, "Where is the swimming pool?"' she says.

'But it's the perfect family home. With the land connected to the house, our boys can spend most of the day outside. It's a friendly community – the village hall runs regular events and pub nights.'

Sounds delightful but, at a time when even the Cotswolds is feeling the pinch, even the most desirable of des-res's are hard to shift.