Small property values on the up

Research shows that the price of smaller properties increased by 1.6% during February, and executive homes rose by 11.1% during the month.

According to the National Association of Estate Agents (NAEA), other properties did not benefit from the same price increase and saw prices fall further.

The average 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 just 0.6%.

However, the average executive property rose to £591,111 during the month, while three-bedroom semi-detached properties and four-bedroom detached homes saw prices fall 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."

He said that increasing prices at the top end of the housing market show that the rich are still able to afford a high end property, and with interest rates at their lowest on record people might be more tempted to invest their money in houses rather than a savings account.

The research also shows that sellers are having to accept cut-down deals after pricing their property too high.

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 were sold at just 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 the four weeks to March 7 by 0.9%, or nearly £2,000, as new sellers continued to be unrealistic about how much their homes are worth.

But the group warned that the increase reflected a resistance among sellers to accept how far prices had fallen, rather than a rebound in the market.