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North South Price Divide Hits Record High
The house price divide between the North and South of the UK has hit a record high, according to Rightmove’s latest house price index out this morning.
The index reveals that asking prices in the South have risen by 4.7% this month while in the North they have fallen by 0.7% to levels first achieved over six years ago in May 2005.
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 alone, asking prices have reduced by an average of 2.6% in the North, while those in the South have increased by 3.9%.
Six out of seven regions with the highest unemployment levels are in the North, which will be exerting a downward pressure on property prices and activity in many northern areas. This is exacerbated by lenders favouring buyers with higher deposits, where the less affluent North also fares poorly.
Miles Shipside, director of Rightmove, says: “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.”
The average UK asking price has, by comparision, increased by 2.8%, with mortgage approvals at a two-year high.
The increase was driven by asking prices in London and the South East. London’s average asking price now stands at £450,210, 2.6% above the previous record set in June this year, while the £317,055 seen in the South East is 0.2% up on the previous high in May 2008.
Shipside adds: “Existing home-owners in the highest priced regions are seeing the value of their bricks and mortar increase even further, though it is at the expense of buyers who are faced with the highest ever asking prices.
“Those who are not property owners, such as first-time buyers or those taking an ownership break in the rented sector, will either have to spend more or compromise on what they can afford.”
The Rightmove figures are in stark contrast to last week’s report from the Halifax, which showed northern towns outperforming their southern counterparts for the first half of 2011.
