LATEST research from international real estate adviser Savills, shows that falling values in the prime regional residential market during 2011 has widened the gap between prime London and regional property prices to its widest, making the best regional real estate look good value compared to the capital.

Prices across the UK’s prime markets fell by an average -3.3% against an increase of 8.7% across all prime London and 14.1 per cent in prime central London, according to the Savills quarterly prime market indices.

This takes prime London prices to a record high and means that £1 million invested in prime regional property at the peak of the market is now worth on average just £829,000 compared to almost £1.1 million in prime London and £1.2 million in prime central London.

Very few areas outside London ended 2011 in positive territory, but amongst them was Weybridge, which saw price rises in the region of 2%. This was supported in the latter stages of the year by international equity, and makes this niche area of the country – at the very top end in particular – pretty much the only location currently able to perform in line with prime London.

Lucian Cook, head of Savills residential research said: “In general, the South East lost around 2% of its value as the traditional fuel of these markets – city money – was largely reinvested in prime London.

“We would normally expect to see a flow of equity out of London in the wake of price recovery in the capital, but that is not yet happening.

“It’s not that domestic owners have stopped trading up, but they are trading up within London and the flow of city money that would normally be the lifeblood of markets such as Guildford is staying put in Parsons Green.

“The result is that the country is now looking better value than for many years, a factor that we would normally expect to stimulate buying activity.”

Cook said that Savills expected the prime regional markets as a whole to react to a softening of prices in the mainstream market, with forecast falls averaging -3% this year.

However, he said it was expected that price movements would outperform the mainstream over the course of the next five years given a lesser reliance on mortgage finance and, ultimately, a progressive flow of housing equity from the capital by way of a ripple effect.

Simon Ashwell, head of Savills Weybridge, added: “Given the wonderful quality of life this part of the country offers in conjunction with excellent communications, it is little wonder that the value of property in Weybridge is still increasing.

“Since the beginning of the year, we have seen increased demand from serious discerning purchasers keen to find their ideal property and growing increasingly frustrated by a lack of quality stock.

“Prospective vendors should take comfort from this undiminished demand and, with interest from London likely to increase throughout the year, now is a good time to consider selling your home.”