During tough economic times you might expect everyone to feel the pain in the housing market as, broadly speaking, economic uncertainty drives down confidence and activity across the board.
But not so, our house price index show. The nation’s fiscal difficulties are rapidly splitting the UK housing market in half as house prices in the ‘general market’ edge downwards but the Prime, top end of the market continues to rise.
Last month Prime properties increased nationally on average by 0.5%, the seventh monthly rally in this market which has pushed the average prime property asking price to £472,340.
Prime property is the top 25% of any property market whether it’s Mayfair or Motherwell and our figures show that in villages, towns and cities across the UK the gap between the Prime and ‘general’ market has been widening since our index was launched four years ago. And it show no signs of stopping.
When the index was launched, the average prime property was on the market for £157,255 more than the average UK home whereas today that figure is now just over £250,000 or 115% more than an ‘average’ home.
It’s not just been Prime properties continuing to rise in value – the general housing market has been dropping away too. During September general house prices dropped by 0.2%, the second monthly drop in a row.
So what’s going on, you may ask. The straightforward explanation is that the recession has yet to significantly impact people who buy homes in the top 25% of the market and, to add fat to the fire, the supply of homes coming on to the market has slowed down, driving greater competition among Prime buyers for the properties that do come up for sale.