The UK housing sector in the UK now seems to be a two-tier market with the Southern UK regions are pulling away from the rest of the country in terms of house prices. Asking prices in the south (East Anglia, South East, South West and Greater London) increased by 4.7% over the past month but fell -0.7% in the northern regions (East Midlands, West Midlands, Wales, North West, Yorks & Humber and North East).
Rightmove director Miles Shipside comments: “While those in the affluent south may have cause to celebrate their prices being well up on this time last year, prices in the north continue to go backwards, leaving the widest price gap ever. For the average asking price of a property in the south you could now buy two average properties in the north and still have enough change left to buy new carpets and curtains.”
Compared to the beginning of the credit crunch four years ago, prices of properties coming to market have risen by 5.4% in the south but fallen by 9.6% in the north. In the last year, sellers coming to the market in the north have on average reduced their asking prices by 2.6%, while those in the south have felt able to put them up by 3.9%. Price decreases usually result when negative sentiment, influenced by uncertainty around employment and tightening of finances, rises. Of the seven UK regions with the highest unemployment levels six are in the north, so employment concerns, especially in the public sector, will be exerting downwards pressure on prices and activity in many northern areas. This will be exacerbated by lenders favouring buyers with higher deposits, where the less affluent north also fares poorly.
Shipside adds: “There is quite a simple formula to generate activity in the housing market, and access to finance through the ability to raise a substantial deposit and a secure job to fund repayments are the key variables. If prices are perceived to be rising then buyers are afraid that their dream home could move out of their reach unless they act quickly. These drivers of higher volumes of transactions and more buoyant conditions are more prevalent in the south”.
In Wales the opposite was true of the North/South price divide this month with average asking prices in South Wales dropping -2.1% and prices in the North and Mid Wales increasing by 3.0%. Average asking prices in the capital Cardiff dropped by just -0.1% to now stand at £197,931.