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

• The average price of a Prime UK property fell by 0.3% to £457,052 in August. Annually, Prime prices were also 1.0% lower than in August 2009
• The average value of a Prime Platinum UK property is now £638,366, having fallen by 0.4% in August. Annually, prices are 0.9% higher
• Overall average house prices also saw a slight monthly fall in August, down 0.2% to £219,716. Year on year, prices were 1.1% higher. The overall average house price is 2.9 times below the average for the Prime Platinum tier
• The level of Prime and Prime Platinum stock increased by 6.7% in August and is almost 84% higher than it was a year ago. Overall UK property stock increased by 6.5% in July, but was only up by 48.3% annually
• After six months of rising prices, the average value of a Prime London property fell by 1.3% in August to £1,133,714. Annual price growth for this tier was 0.3%. Prime Platinum property prices in the capital decreased by 1.4% to £1,746,249, but recorded relatively strong annual price growth of 3.4%
• Half of the regional Prime markets witnessed annual price growth in August, while four saw a monthly increase. Yorkshire and the Humber recorded price rises of 0.6% between July and August
• Seven of the ten regional Prime Platinum markets saw annual price rises, with Scotland and the South East recording 4.6% and 4.1% respectively. Wales saw the highest monthly price growth in August of 0.8%. The West Midlands witnessed the greatest fall in prices of 1.6%

Break in price growth for Prime property

After four months of continuous price growth in the UK’s Prime property tier and six consecutive months of increases for Prime Platinum, the average value of a top end home experienced a slight dip in August.

UK Prime property prices fell by 0.3% to £457,052 and were 1.0% lower than they were in August 2009. Prime Platinum property recorded a 0.4% decrease this month but still saw annual growth of 0.9%. The average value of these properties now stands at £638,366.

New stock has continued to come onto the market at a time when demand has begun to drop back. Buyer activity has reduced slightly over the summer, not only responding to the traditional seasonal pattern, but also to renewed worries of a double dip recession, which is causing some to postpone a move.

Rate of stock level increases not abating

The levels of Prime and Prime Platinum stock increased for the seventh month in a row in August. The monthly increase for both tiers was 6.7%, with annual growth of nearly 84%. The level of stock in the overall UK market has also been increasing on a monthly basis, but annual growth was considerably lower in August, at 48.3%.

With a healthy range of quality property to choose from, upward pressure on prices has eased in all but the most sought-after areas. Buyers do not have to compete to secure their ideal home and while they are prepared to pay a fair price for top end property, they are not prepared to pay over the odds in case the market enters another serious downturn. As a consequence, vendors who are serious about making a sale have to consider their asking price carefully.

The Prime property market is likely to continue to follow a similar pattern over the next few months as buyers act with caution. Towards the end of the year, the level of stock is likely to drop back again as vendors wait to see which way the economy is going.

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Regional Property Price Analysis

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London Analysis

• Prime London property prices fell by 1.3% in August to £1,133,714 but were up by 0.3% on the same time last year. The overall average London price is currently £438,513
• Prime Platinum property prices in the capital recorded a fall of 1.4%, setting the average value at £1,746,249 in August. However, prices for this top tier grew by 3.4% between August 2009 and August 2010
• The level of stock increased by 3.7% in both the Prime and Prime Platinum London tiers this month and is over 90.0% higher on an annual basis Within the capital, Central London property put in the strongest performance on a monthly basis.
• Prime prices increased by 0.5% in August and Prime Platinum prices rose by 1.5%. South East London also recorded price growth in both tiers
• Annually, North West London witnessed the highest price appreciation in August, at 8.5% for Prime property and 16.3% in the Prime Platinum tier. Central London also saw strong growth of 7.8% and 11.8% respectively
• Islington was the London borough that saw the greatest monthly price increases in August, recording 4.8% in the Prime tier and 7.1% in the Prime Platinum tier; however, more boroughs saw price falls than rises this month. The Royal Borough of Kensington and Chelsea continued to show the highest levels of annual growth - 18.5% for Prime property and 24.3% for Prime Platinum

Prime Central London outperforms rest of capital

Following six months of healthy growth, average prices for Prime and Prime Platinum London property fell in August. Prime prices decreased by 1.3% to £1,133,714 and Prime Platinum property values fell by 1.4% to £1,746,249 against a backdrop of a 3.7% growth in stock. However, the top tiers did witness annual growth of 0.3% and 3.4% respectively.

Central London, which has seen monthly price rises throughout 2010, was the strongest performer, helping to temper price falls in some of the suburbs. Prime prices increased by 0.5% to £2,323,504 with annual growth of 7.8%, and Prime Platinum prices rose by 1.4% to £3,465,022 with annual growth of 11.8%.

In contrast, South West London (3.1%) and West London (4.3%) saw some of the highest monthly Prime price falls.

Large family properties in the suburbs, including Haringey, Ealing and Wandsworth, have been less in demand from buyers over the summer, which has instead seen purchases focus on town houses in zone one, as international buyers and UK businessmen look for prestigious properties without the commute.

London prices will be first to pick up

Prime property in the capital has seen prices and activity fall slightly over the last couple of months and won’t be totally unaffected by a second downturn. However, there will always be a high level of interest in Prime property from the wealthiest UK and international buyers looking to live and work in one of the world’s top business, cultural and entertainment hubs. This interest will help buoy prices in a way that cannot be guaranteed within the regional markets.

London Borough Analysis

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Regional Commentary

Seven regional Prime Platinum markets and five regional Prime markets continued to witness annual property price growth in August. However on a monthly basis, prices in both tiers increased in less than half of the ten regions.

South East

Top end property prices fell for the second month in a row in August. Prime prices now sit at £559,887 and Prime Platinum at £751,861. However, annual price growth was the third highest of the all the regions in the Prime tier (1.1%) and the second highest in the Prime Platinum tier (4.1%) and the region is expected to continue to perform above average.

South West

Prime property prices decreased by 0.6% to £480,270 this month, and were also down by 1.3% in the 12 months to August 2010. Prime Platinum values dropped by 0.8% to £656,234 but witnessed annual growth of 1.2%. Prices remain second highest of all the regions and this market will be one of the first to pick up again in the following months.

Wales

Wales was one of only two other regional markets to experience monthly price rises in August as interest in top end property continued and the amount of property coming on to the market slowed. Prime prices increased by 0.6% to £334,217 and Prime Platinum prices were up 0.8% to £457,037.

West Midlands

Top tier property values fell in August, as consumers act with growing caution amidst renewed talk of a double dip recession. Prime prices were down by 1.3% to £375,842 and Prime Platinum prices declined by 1.6% to £529,052 against a backdrop of increasing stock. However, both tiers recorded annual growth.

East

The East of England saw Prime property prices fall for the second month in a row as an 8.7% rise in stock occurred during a quiet time for buyer activity. Prime prices fell by 0.7% to £457,814 and Prime Platinum prices slipped 1.1% to £622,855. Price growth for Prime Platinum was 1.5% higher annually.

East Midlands

At 3.9%, the East Midlands witnessed the lowest increase in Prime stock of all the regional markets. However, buyer demand also dropped back in August and prices fell by 0.7% in both the Prime and Prime Platinum tiers. Average values are now £349,146 and £490,551 respectively.

North East

Prime property prices fell in August as the level of available stock jumped by a substantial 14.2%. Prime prices were down by 0.4% to £312,330 but saw annual growth of 1.4%. Despite the growth in stock, Prime Platinum prices increased slightly on a monthly basis, rising 0.1% to £434,631, with an annual rise of 1.1%.

North West

The North West was one of only three regions to see monthly price increases for both tiers – its fifth consecutive monthly rises. Prime property values increased by 0.2% to £319,154 and Prime Platinum prices also rose by 0.2% to £450,559. However, on an annual basis, prices fell slightly.

Yorkshire and Humber

Yorkshire and the Humber recorded some of the highest monthly price increases in both the Prime (0.6%) and Prime Platinum (0.7%) tiers. This was despite the level of stock increasing by 8.9%. Prime property prices now stand at an average of £343,297 and Prime Platinum at £485,744.

Scotland

Prime stock increased by 10.3% in Scotland in August but prices remained relatively stable. The average prime property price was up 0.2% on July to £403,998 and was up 2.6% on August 2009. Prime Platinum saw a slight monthly dip of 0.2%, taking prices to £555,254. Annual growth for this top tier was 4.6% this month – the highest recorded for all UK regions.

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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 80,000 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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