Nigella LawsonJohn Phillips/UK Press/Press Association Images

Britain's most expensive neighbourhood boasts average property prices of almost £1.9 million - an increase of 5% since this time last year. It is also home to the UK's most expensive street, where the average property is worth more than £22 million.

So where are properties fetching these extraordinary prices, why are they so valuable, and what is set to happen to prices here next year?

Most expensive

The most expensive neighbourhood is Kensington (home to Nigella Lawson, pictured), which also boasts the most expensive street – Kensington Palace Gardens - home exclusively to billionaires, royalty and international ambassadors.

Zoopla.co.uk named the rest of the top five as Knightsbridge (SW7); Chelsea (SW3); Notting Hill (W11) and West Brompton (SW10) - which are essentially all in a small pocket of West London just beyond the wilds of Paddington. In each of these areas, the average property price is at least £1.14 million - which is a crazy cost when you consider what a mess the country is in.

Why?

The reason why these areas are bucking the trend is partly because the mega-rich are often immune to the pain around them. They are sitting on millions and there's no reason why mass unemployment and economic stagnation should change that.

The second reason is that they remain a magnet for overseas buyers. Nicholas Leeming, Business Development Director at Zoopla.co.uk said: "While the majority of the country's homeowners reflect on a year of stagnant and falling average house prices, those at the top of the market have had a good run over the past year. International demand for prime properties in the nation's premium postcodes has boosted prices in London and the South East and further widened the gap between the haves and have nots."

Property values in the most expensive parts of the London are now almost 10 times higher than in other parts of the country. An iPad-sized area of floor space in Kensington now costs over £550 on average while the same amount of space in Middlesbrough costs only £60.

Outside London

However, this part of London is far from the only place in the UK featuring million pound properties. In fact, Britain is now home to 245,790 property millionaires, up 12% on this time last year. And there are now 6,682 Million Pound Streets in Britain, where the average home is valued at over £1m, up 13% on last year.

The Zoopla rich list found that Virginia Water in Surrey, home of the exclusive Wentworth Golf Club, is the most expensive area outside London. Average prices in the wealthy oasis now stand at £968,009. This is followed by Beaconsfield, Buckinghamshire, Cobham, Surrey, Keston, London and Esher, Surrey. These areas are really just an extension of London, where stockbrokers keep their families in large grounds or exclusive developments while they commute to the city.

What next?

Separate research from Lloyds TSB has confirmed the rise and rise of posh properties. Multi-million pound property sales rose to their highest level on record in 2011. There were 1,518 property sales worth at least two million pounds in 2011, a rise of 5% since 2010. This is the highest number of sales in this price bracket since records began in 1995.

There is some small weakness around the £1 million level. The Lloyds TSB research found a tailing off in the sales of properties worth between £1 million and £2 million in the last 12 months. Meanwhile, in areas outside London, where international buyers hold less sway, prices have fallen slightly. In Virginia Water, for example, prices were down an average of 3% in the last year.

In the difficult financial environment, we could see continued weakness in these areas, reflecting prices around the country. London meanwhile, is likely to continue to detach from the rest of the country as property prices head into the stratosphere.

Britain's Most Valuable Postcodes (and average price)

W8 (Kensington) £1,873,866
SW7 (Knightsbridge) £1,430,863
SW3 (Chelsea) £1,425,385
W11 (Notting Hill) £1,302,763
SW10 (West Brompton) £1,140,593
NW3 (Hampstead) £1,022,748
SW1 (Westminster) £1,010,228
W1 (West End) £987,191
GU25 (Virginia Water) £968,009
SW13 (Barnes) £958,871
Source: Zoopla.co.uk (June 2012)

Britain's Most Valuable Towns (and average price)

Virginia Water, Surrey £968,009
Beaconsfield, Buckinghamshire £796,064
Cobham, Surrey £744,659
Keston, London £743,768
Esher, Surrey £704,200
Chalfont St. Giles, Buckinghamshire £698,003
Richmond, Surrey £668,728
Gerrards Cross, Buckinghamshire £648,134
Radlett, Hertfordshire £642,130
Weybridge, Surrey £608,351
Source: Zoopla.co.uk (June 2012)

Britain's Most Valuable Streets (and average price)

Kensington Palace Gardens, London W8 £22,167,649
The Boltons, London SW10 £18,591,793
Frognal Way, London NW3 £10,989,886
Courtenay Avenue, London N6 £8,625,444
Compton Avenue, London N6 £8,456,607
Park Place Villas, London W2 £7,912,172
Palace Green, London W8 £7,228,788
Montrose Place, London SW1X £7,168,084
Manresa Road, London SW3 £7,076,769
Ilchester Place, London W14 £6,750,971
Source: Zoopla.co.uk (June 2012)