As The North-South property divide grows – why are there less houses on the market than ever?
Over the course of the past 18 months, the regional landscape of the UK’s property market has taken on an increasingly fragmented state.
The old world order of a London bubble soaring skywards, whilst the rest of the country follows to varying degrees, has flown out of the window and we are living in a brave new world where the Capital is flagging far behind its regional counterparts. This is illustrated starkly by Land Registry data, showing that prices across London’s Boroughs rose by just 3.7% in the year to February.
Showing the days of double digit percentage prices rises are far behind us, with four London districts actually experiencing declining prices. By contrast, prices in the North West experienced close to double this level of growth at 6.7%, and the East and West Midlands outstripped even this with 7.5% and 7% upward trends respectively. Now it must be noted that some London Boroughs have bucked this general trend. Just under a third of the Capital’s local authorities managed to maintain some of their old dynamism and actually experienced growth higher than the 6.7% of the North West, the closest comparable demographic area. However, they look to be in the minority and whilst Harrow experienced a strong 8.1% growth in prices, its next door borough, Brent, actually saw a 2.3% price decrease during the same period, a sharp contrast of bordering outer districts that shows the dangers of cherry-picking data from across the Capital.
Now house prices are not the one and only indicator of a market’s strength, and it’s important to examine other areas of the country’s property data when trying to understand the state of play. One powerful factor is transaction rates and the numbers of properties coming to the market. This week,he Royal Institution of Chartered Surveyors (RICS) reported that the number of new instructions in June fell for the 16th month in a row and noted that the average number of properties on the books of estate agents is at its lowest point (42.5) since the institution began to gather records in 1978.
It would be easy to label Brexit as the reason for people’s reticence to move home but, when asked for a reason, almost half of surveyors blamed wider political uncertainty instead. When you take a look at the Government’s residential property transaction data (page 4 of this document) we can see that after the huge spike caused by April 2016’s stamp duty reforms, transaction rates have stayed below 2015 levels and never quite recovered, although the general trend is ever so slightly upwards. Rather than viewing this as a doom and gloom view of the property landscape, what this does show is the fantastic potential for growth within the market once confidence is restored. However, we must strive for some form of political stability in these strange times in order to break through today’s challenges and get Britain moving again.