LONDON SLUMP SHRINKS NORTH-SOUTH DIVIDE IN HOUSE PRICES
* The north-west of UK is expected to have 18% growth in property value, said estate agency group Savills. Photograph: Victoria Jones/PA
"LONDON SLUMP SHRINKS NORTH-SOUTH DIVIDE IN HOUSE PRICES"
Published by Richard Partington Economics correspondent, and Frances Perraudin, Housing Market - The Guardian on 16 MARCH, 2018
Manchester and Birmingham set for faster growth than rest of the country as property value rises in northern England.
The north-south divide in house prices is beginning to narrow as the booming London property market fizzles out, according to experts who forecast parts of northern England are set to maintain a recent increase in value.
Growth in house prices in the capital is expected to slip below the national average, continuing a slide triggered by the Brexit vote. This will result in further downgrades in parts of the city with the greatest concentrations of luxury flats, the experts said. Meanwhile, major regional cities such as Manchester and Birmingham and their suburbs are expected to grow faster than the rest of the country, albeit rising from a lower level than London.
Nitesh Patel, a housing economist at Halifax bank, said: “Affordability issues suggest that price growth will continue to remain low. [But] outside London, there are few signs of significant stresses.”
Savills, the estate agency group, forecasts average UK house price growth of 14% over the next five years – but with London significantly underperforming the rest of the country by growing at roughly half that rate. In sharp contrast, the north-west is projected to see the strongest growth in Britain at about 18%.
The comments came as a survey this week showed that house prices in prime parts of London had tumbled deeply over the past year, with Wandsworth – which includes much of Clapham, Balham and Putney – falling nearly 15%. By contrast, the figures from estate agency Your Move showed that the north-west was now the fastest growing market in England and Wales with prices in Blackburn growing 16.4%.
Years of rapid growth in London have made the capital increasingly unaffordable, particularly for younger buyers who are forced to rent expensive homes in the city while struggling to save for a deposit. The average home in the capital costs £484,000, according to the Office for National Statistics, almost double the average for England as a whole of £244,000.
House prices in relation to average earnings in London are at roughly nine times annual average earnings, while in the north-west they are about five times more expensive than average yearly pay.
Andrew Montlake of the mortgage broker Coreco, said: “Things started to change, with companies looking at moving to other areas. That has to be positive – everyone knows there needs to be some kind of rebalancing.”