Brighter outlook for prime property

High end sellers are flooding back to the prime property market, encouraged by the improved economic outlook and confidence in the long term recovery of the market, says Primelocation.com.

The Primelocation.com Prime Index recorded a 4.5% monthly increase in stock in February and a rise of 17.0% over the past twelve months, taking numbers to slightly below pre credit crunch levels. All but three of the regional Prime markets experienced a double-figure annual increase in stock.

Having postponed their move during the uncertainty of the recession, vendors finally appear ready to act. Almost half (48%) of sellers using Primelocation.com are confident that the UK property market will fully recover in the next two years, underpinned by sustained demand and a stabilising economy*.

Following the seasonal lull over December and January, top tier property prices are now levelling out. While there were marginal falls in February of 0.3% for Prime, Prime Platinum prices remained level and some of the regional markets saw slight increases. While the influx of new stock may have initially acted to stall price rises overall, strong demand for quality stock is likely to push prices up over forthcoming months.

Andrew Smith, Head of Research at Primelocation.com, comments: “Until recently the supply of quality properties has been restricted by reticent sellers, who have been biding their time through the downturn until more concrete market improvements became visible. It is certainly a sign of increasing confidence in the market, and the wider economy, that so many are now ready to put their homes up for sale, and the level of stock is now approaching pre credit crunch levels once again.

“Significant increases in Primelocation.com site traffic and property searches suggest that strong, pent-up buyer demand exists and this is likely to counteract the influx of supply, driving prices upwards as competition gradually picks up.

“London has already seen price growth in February as demand translated into higher transaction levels and, as the capital is often the last to feel the effects of a slowdown and the first to see prices climb back up again, the question is: how long will it be before the rest of the UK’s Prime markets follow suit?

“With finance much less of a barrier for Prime buyers, we are simply waiting for them to regain the belief that a new investment in property is prudent. All the evidence suggests that we will not have too long to wait.”

* Data from a MyHomeLife Poll conducted for Primelocation.com, February 2010.