The top 20% of properties by value have recovered at a much faster rate than those with a lower value, with prices increasing by an average of 2.7% in August.
According to the latest Chesterton Humberts House Price Poll of Polls, properties in the top 20% of the market will sell for an average of £337,554. This contrasts with the bottom 20% of the market, which saw prices increase by 1% month-on-month to an average price of £110,341.
Overall, the average residential property in England and Wales increased 0.9% month-on-month to £168,816. This is the third consecutive monthly increase in house prices. Kensington & Chelsea remains the most expensive borough with an average residential house price of £673,307, however this is 15.4% lower than August 2008.
City of Westminster, the second most expensive borough with an average price of £645,847, is faring much better with prices just 1.9% lower than August 2008.
Robert Bartlett, Chesterton Humberts CEO, comments:
“The third monthly increase in average house prices is a reflection of the increasingly positive attitude that is emerging within the overall market and economy.
“The rally in London, thanks in part to foreign buyers keen on bargains, has fuelled the recovery of prime property, which is recovering more rapidly than the lower end. The wider recovery across the board has been assisted by the ongoing shortage of good quality properties coming to market. However, a lack of available finance for many buyers is preventing the recovery from fully filtering down the chain.
“Well-priced, attractive properties and especially those in the most desirable locations are selling very well. We have numerous examples of properties selling within days of coming to the market. Second home buyers are also returning to the market, with houses priced between £850,000 and £1.5m in Devon, East Sussex and Cornwall proving particularly popular.
“However, the danger posed to the market now is one of vendor/buyer expectation becoming polarised again. Quite rightly buyers are being cautious and I have heard examples where vendors have changed their mind and withdrawn from sales where they no longer believe they are receiving sufficient value for their property.
“We need to understand that the economy is still fragile. Mortgage lending is still extremely hard to come by, unemployment is still rising and we are now within nine months of a general election. It is essential for the economy as a whole that a slow, but sustainable rate of growth is achieved and that more liquidity comes into the market.”
Douglas McWilliams, Chief Executive of CEBR, comments:
“The price of a typical house rose by 0.9% over the month to August 2009 to reach £168,816. It now seems clear that the housing market has bottomed out, although we cannot rule out some surveys reporting monthly falls in the future.
“Looking further ahead, the recovery is likely to be variable but generally quite sluggish. There are some factors, particularly rising unemployment, which will act as an anchor to rising house prices. On the other hand, there are potentially stronger factors pushing house prices in the other direction: The pace of recovery in mortgage lending; that the market arguably overshot on the downside on a fundamentals basis; and undersupply in the market especially from a lack of new property development.
“At the top end of the London market, the recovery is likely to be stronger than the London and UK average due to interest from foreign buyers. Sterling’s weakness against the Euro makes UK property a potentially attractive investment for wealthy foreign investors.”