Overview

 

The Primelocation.com Prime Index offers a unique, independent and robust view of the UK's prime property marketplace. The index reflects the evolving prime market, and for the first time provides authoritative data for all regions of the country.

It segments the upper end of the market as follows:

• Prime – incorporating the top 25% of all UK property by value
• Prime Platinum – incorporating the top 10% of all UK property by value

 

 

• Prime UK property recorded an average price of £450,633 in January, a 0.7% decrease on December. Annual growth for January was 3.8%
• The average price of a Prime Platinum UK property was £618,604 in January, down 0.7% on December but 5.8% higher than in January 2009
• In contrast, overall average house prices have fallen by 0.8% in the year to January 2010, indicating that the Prime markets continue to outperform the UK property market as a whole
• Prime and Prime Platinum stock levels are both up over 23% on January last year. More stock is expected to become available over the next couple of months as Primelocation.com data indicates that 10,000 vendors have yet to appoint an agent to market their homes
• Average Prime London property prices were £1,080,657 in January, a 5.3% increase on January 2009, but a 1.0% decrease on December 2009. The value of Prime Platinum property in the capital was £1,622,796 - up by 8.6% year on year and down 0.8% on December 2009
• The North East of England was the best performing region for Prime property prices in January, with growth of 0.8%. Yorkshire and the Humber retained its position as the region with the highest annual growth (7.9%)
• Only two regions remain in negative figures for annual price growth in the Prime Platinum category. Yorkshire and the Humber saw the greatest Prime Platinum price growth in the year to January of 8.9% (excluding Scotland and Wales)

 

Cold snap continues to cool Prime prices

Prime and Prime Platinum property prices experienced a further slight dip in January 2010 as the seasonal lull in activity continued, assisted by the UK's prolonged cold snap, which hindered or prevented property viewings for many country homes. However, prices have only fallen just under 1% in total and overall annual growth remains positive, with only a couple of the regions seeing marginal falls.

Average house prices for the whole of the UK market were 0.8% lower than in January 2009, with London and the South East the only regions to see annual growth.

 

Prime stock set to receive a boost

The top two property tiers are expected to experience a bounce in activity over the coming months, as the weather improves and more properties come onto the market to satisfy the bullish demand.

Prime stock is already starting to return to more normal average levels, having increased by over 23% annually, and Primelocation.com data shows that in December alone, some 10,000 vendors had yet to appoint an agent to market their homes, indicating that a surge of new Prime stock is imminent.

Following a prolonged period of limited Prime stock availability, the increase in quality supply will galvanise buyers to enter the market as they compete to purchase the best properties. Some buyers are likely to be prepared to offer a premium to secure their ideal home, buoying prices and pushing transaction levels up.

 

Appetite to buy on the up

Having dropped off significantly at the end of 2008 and into the first half of 2009, Prime property stock is now beginning to return to more normal levels. It has risen by 23% in the last year in both the Prime and Prime Platinum tiers and is now drawing closer to average levels experienced before the credit crunch. The heightened buyer demand expected in spring 2010 should be able to support a further increase in properties coming onto the market without causing a dip in prices.

 

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Regional Property Price Analysis

 

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London Analysis

 

 

• The average price of a Prime London property was £1,080,657 in January, a decrease of 1.0% on December but a 5.3% increase on January 2009. The price is 2.5 times higher than the average London house price of £435,136
• The average price of a Prime Platinum London property was £1,622,796 in January. This price is 0.8% lower than in December but up 8.6% year on year. The price remains 3.7 times higher than the average London house price
• Stock levels for Prime and Prime Platinum property in the capital increased by 27% between January 2009 and January 2010 and are beginning to approach more normal average levels
• The Prime property market performed best within North West London during January, with a 0.9% rise in prices since the previous month. The region also recorded the highest annual growth (13.1%)
• North West London properties were also the top performers in the Prime Platinum category in January, with a monthly increase of 1.0%. However East and North London saw the highest annual price rises of 23.6% and 22.8% respectively
• The borough of Kensington and Chelsea recorded the largest price increases for both Prime and Prime Platinum property in January

 

London still a top performer

While the capital's Prime property markets have not been immune to a seasonal cooling-off of prices due to lower levels of activity from domestic buyers, they were still among the top performing regions for annual growth in January. Prime and Prime Platinum property recorded price increases of 5.3% and 8.6% respectively.

North West London was the best Prime performer over the course of the month. Prices in the region were driven up by a drop in the number of new properties coming onto the market during a period of sustained demand. The region also experienced the lowest annual growth in stock at 1.4% - an increase almost 15% less than that of the next closest London region.

 

Dual wave of demand to buoy prices

Two waves of demand are expected to boost property prices in the spring. Those who have instant access to equity are likely to purchase over the next couple of weeks, in order to take advantage of the current lower prices before those waiting for the confirmation and receipt of their bonuses add to the competition. Bankers' bonus payouts may be delayed this year, as many firms consider how to deal with the Pre Budget Report bonus tax. This group will form the second, greater surge in demand, which is expected to buoy prices and even push them up in key locations.

High spec townhouses and investment properties in central London and large family properties outside of Zone 1 will be particularly affected and searches for these properties are already up by 30% since January 2009.

 

London stock levels set to rise

Stock levels in the Prime London market increased by 27% in the year to January, compared to an 14% annual fall in the overall UK market. Primelocation.com data suggests that a substantial number of Prime London vendors are now ready to put their properties on the market. This will help to bring supply up to more normal levels.

The anticipated General Election is unlikely to stall transactions in the Prime market, as it should have little influence on buyers' finances, and may even help to strengthen consumer optimism.

 

London Borough Analysis

 

 

 

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Regional Commentary

 

The majority of regional Prime markets experienced marginal monthly price falls in January. However, most have seen annual growth. Yorkshire and the Humber had the highest annual price increase, while the East of England continued to be the weakest performer.

 

South East

Following a period of robust growth, the South East saw some of the largest monthly price falls in the Prime (1.5%) and Prime Platinum (1.3%) categories. Demand slowed due to snow disruption and a pre bonus-season lull, putting prices at £542,839 and £711,558. An expected surge of properties coming on to the market, combined with the investment of bonuses into top end homes, is likely to buoy activity and prices in the spring.

 

South West

The average price of a Prime property in the South West was £469,952 in January as the region continued to be affected by a seasonal lull in activity. However, the market is set to turn a corner, as more properties come onto the market and many homeowners looking to take advantage of the more affordable prices.

 

Wales

The Prime property market in Wales continues to grow, with the Prime market seeing an annual price increase of 6.5% and the Prime Platinum market a rise of 11.4%. Prices were £344,565 and £465,477 in January and are being boosted by families looking to relocate there for a better quality of life.

 

West Midlands

The West Midlands saw a jump in top end stock coming on to the market in January, causing the region to record some of the largest monthly price falls. Prime prices fell 1.2% to £380,929 and Prime Platinum prices by 1.5% to £533,011.

 

East

Having experienced the slowest rate of recovery of all regions, Prime property in the East of England saw some of the lowest price falls, indicating that it may be about to turn a corner. Prime prices fell by 0.3% to £452,696. Relatively high levels of stock have had a negative impact on prices recently, but the balance is likely to be restored in the spring as demand picks up.

 

East Midlands

Following ten consecutive months of Prime price rises in the East Midlands as a result of restricted supply, January saw a slight dip in prices. The 0.5% fall took prices to £359,140 and was likely to be a result of more stock coming onto the market at a time when the cold weather has affected buyer appetite.

 

North East

The North East was the only region to record a monthly price increase in both the Prime and Prime Platinum categories in January (0.8%). The region is the only one yet to receive a boost to stock levels, although the rate of annual decline in stock is now beginning to slow. Prime prices were £303,182 in January.

 

North West

The average price for a Prime property in the North West was £311,607 in January, with the average Prime Platinum price at £437,427. The region has seen Prime stock levels increase over recent months, while demand has remained subdued, causing prices to recover more slowly than in other regions.

 

Yorkshire and Humber

Having been the best performer in 2009, Yorkshire's Prime property markets have continued to do well. However, the region is currently experiencing the traditional seasonal lull, with Prime prices falling 0.5% to £348,147 in January, and growth is likely to come back in line with that in the other regions over the year.

 

Scotland

The seasonal lull has been experienced less acutely in the Scottish Prime markets, with buyer demand remaining relatively steady. Prime Platinum property actually saw a slight increase in January of 0.1%, taking the average price to £527,233. However, a surge in supply over the last couple of months may start to act as a dampening factor on prices.

 

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The Methodology

 

The Prime Index is created using a statistical methodology developed by Calnea Analytics, the company who produce the official Land Registry house price index. Primelocation.com has partnered with Calnea Analytics to ensure that the data is analysed to the highest possible standards by a company with an outstanding track record in the analysis of house price information. The result is a unique, independent and robust view of the UK's prime property marketplace.

The Prime Index tracks the supply and asking prices of prime property at UK, regional and London borough levels. Primelocation.com believes that there is a relative prime market in every region and that any definitions of prime must be flexible enough to react to overall market prices, i.e. the prime market is always relative to a specific region, the current local property market and asking prices. Given regional price differentials, selecting properties above a set value would bias the sample to London and the South East. Therefore, Primelocation.com has defined prime in a number of ways.

Not all the data from the Primelocation.com database is used in the monthly calculations. A number of exclusions are carried out to ensure that the final figures are not distorted. For example, properties tagged as sold, or with invalid postcodes, are not included. Even with these exclusions, the index is based on a substantial sample of prime properties – over 50,000 prime properties for sale across the UK.

The index is calculated using mix-adjusted averages. These are used instead of simple averages to avoid common distortions to the data. The mix-adjusted method removes the impact of monthly changes in the stock of property in the prime market and is adjusted by location, property type and bedroom numbers.

 

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