Economic enthusiasm stimulates Prime property markets

A raft of more positive economic news, including an end to the double-dip recession fears, has finally acted as a genuine boost to buyer confidence. Regional activity has picked up, with more quality stock coming onto the market, allowing a gradual release of the pent-up demand of the last two years.

The South East, London and the South West were the top performers in the Prime tier, witnessing monthly price growth of 2.0%, 1.7% and 1.5% respectively as demand for top-end property bounced (see Table 1.). Securing finance is not an issue for these buyers and the most sought-after property is once again the subject of strong competition.

However, Scotland was the most consistent performer over the past year, with annual Prime property price growth of 7.8%. Stock levels have not increased as fast as in some of the other regions, while demand has remained high (see Table 2.).

In second and third place in terms of annual growth were the South East (7.5%) and the East of England (5.5%), where a strong demand for large family homes in more rural areas and a shortage of stock drove the price rises.

The Prime Platinum tier followed a similar pattern to that of the Prime markets, with Scotland (12.7%), the South East (9.2%) and London (7.8%) recording the highest annual price growth.

Andrew Smith, Research Director at Primelocation.com, comments: “With the double-dip recession fears increasingly dismissed by analysts, the FTSE climbing to reach the highest level since the start of the credit crunch and preliminary figures expected to show that the economy has grown in Q1 2010, consumers are finally prepared to believe that a long term recovery is underway.

“Having put off a property purchase or move over the winter months while uncertainty remained, home buyers and investors are now returning to the market, pushing prices up despite a healthy supply of quality stock. Competition and reports of gazumping have returned in the most prestigious locations such as popular commuter villages in the South East and East of England.

“Wealthy UK and overseas buyers will be largely unconstrained by the financial impact of any tax changes and the prospect of a new government may even act as a tonic for Prime real estate, helping to strengthen the already improving consumer optimism. All evidence points to a continued high volume of activity post-election when the economic and financial outlook is clearer, and we could be facing a busier than usual summer as home movers and investors prioritise property transactions while the timing is right.”

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