Home prices rising at top of market

The National Association of Estate Agents (NAEA) said the average selling price of a two-bedroom flat increased by 1.6% during the month to £124,727, while the sale price for a three-bedroom terrace increased by 0.6%.

Top end, executive properties enjoyed the biggest lift, with the price for which they change hands soaring by 11.1% during February to average £591,111.

But three-bedroom semi-detached properties and four-bedroom detached homes fared less well, seeing their prices drop by 3.8% and 4.2% respectively.

Peter Bolton King, chief executive of the NAEA, said: "Smaller houses actually saw their value increase - this suggests that people who are buying are picking up smaller houses than they may have done previously, possibly because they can only get smaller mortgages. It may also reflect a trend of downsizing.

"The very top end of the market has also performed well, demonstrating not only that the very rich can still afford a high end property, but that with plummeting interest rates are now perhaps more tempted to put their money into bricks and mortar."

The research also showed that sellers are having to accept hefty discounts on their properties, as they continued to market them at too high a price.

The average executive home sold for 9.1% less than its asking price during February, while homeowners selling flats and three-bedroom homes had to accept offers of between 92% and 93% of their asking price.

Four-bedroom homes held up slightly better, selling for an average of 6% less than their vendors had originally asked.

The figures come after property website Rightmove said house prices rose for the second month in a row during March as new sellers continued to be unrealistic about how much their homes are worth.