Weak Sterling, low interest rates, demand outstripping supply and unstable global investment markets are the main drivers behind the growth, according to the latest Prime Index from property website PrimeLocation.com.
According to the findings, the average asking price of the top 25% of the market by value in the UK property market grew by 2.9% between January and June 2011, pushing the average Prime asking price up from £454,276 to £467,310.
The majority of this increase, however, has been in the last three months. The average increase from January to March was just £478, up 0.1%, but it has jumped by £12,555 over the past quarter.
Over the same period, asking prices for Prime Platinum properties, that is the top 10% of the market by value, also rose by 3%, or £19,501, to an average of £649,083.
The Prime and Prime Platinum markets are significantly outperforming the general UK property market, within which asking prices increased by 2.2% over the first half of 2011 to an average of £220,876.
Promisingly, all three market sectors recorded a fourth straight monthly increase in June, prompting suggestions of a brighter second half of the year for the UK housing market, its report says.
‘Following a quiet start to the year, the UK prime property market burst into life in April. There are a number of factors which could be at work here beyond seasonality, notably the weak performance of Sterling against the Euro and many other currencies over the first half of the year which has made the UK continue a very attractive market to foreign buyers,’ said Nigel Lewis, property analyst at PrimeLocation.com.
‘The prospect of interest rates rising has also diminished, meaning that the cost of mortgages will remain low for those who can afford it. Finally, since the earthquake in Japan global equities have shown signs of instability, encouraging people to invest in bricks and mortar again,’ he explained.
Leading the regional charge in Prime property prices were the North East and South East of England, as well as Scotland, which grew by 7%, 5.4% and 4.8% respectively over the course of the first half of the year. Prices in London, meanwhile, increased in line with the national average of 2.9%.
