by Mark Johnston
Historically, people have always had to pay more for a house in the south ofEngland. The north/south divide in the nation’s financial fortunes and job prospects is also fuelling growing gap in house prices.
UK house prices were marginally up in October 2011, but as of late this has slowed down and the gap continues to widen between the north and south.
The current average house price data suggests that the divide is becoming even more pronounced with recent data from the Land Registry and the Royal Institute of Chartered Surveyors (RICS) suggesting that prices had risen in London, the south east and the midlands, whilst continuing to fall in areas such as the north west, Yorkshire and the north east.
A study by the Centre for Economics and Business Research (CEBR) claim that prices inLondonand surrounding areas will grow by over 2% during 2012.
It seems that London prices are being propped up by buy to let investors who are getting healthy rents from people who can not afford to buy.
Many experts believe that theLondonmarket is distorted by European cash loving for a safe and tax efficient haven.
Recent data from estate agents Knight Frank highlights the effect that demand from wealthy overseas buyers are having onLondonhousing prices.
Dr Peter Williams, housing market specialist and chairman of Academetrios, stated that “the London housing market is behaving in a different manner to the rest of the country, with out London the annual rate of house price decline would be -2.7%”.
TheLondonhousing market is a bubble and like all bubbles it will eventually burst.
Figures have already recently shown that the property price gap between the London boroughs has begun to widen sharply, meaning that Londoners will soon be priced out of large parts of the capital.
House prices in traditional up market areas such asWestminster, Kensington and Chelsea have soared in the last 3 years, but other areas have underperformed in the property market, thus making it harder for people to move between different parts of the city.
House prices in the north are much lower; this is mainly due to public sector cuts which have driven up unemployment. Data has also shown that home owners in the south tend to have a larger proportion of equity and more income.
All this said however, it may well be possible that this is simply a snap shot of the current market conditions. Property trends normally tend to start in London and then ripple outwards, finally making their way up north.
The Centre of Economics and Business Research (CEBR) also expects house prices in the north east by 2.7% and theNorth Westproperty prices are likely to shrink 1.9%. The report also expectsWalesand much ofNorthern Englandto suffer further falls in prices during 2013, while London prices will increase by 2.3%
With the uncertainty in the current climate the simple fact is that there is a growing population and a shortage of housing supply, which produces an imbalance which will underpin property values well in to the future.
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