The widening gap between house prices in the North and the South has been confirmed in Halifax’s latest research.
Figures show there has been a marked difference in house prices since 1991 with prices shooting up in Greater London, the South East, the South West and East Anglia, with the North posting more modest returns.
Martin Ellis, group economist at HBOS, said: ‘What stood out in the research was that there are big variations, not just across the country, but within the various regions as well. There is a big North-South divide which comes out starkly throughout the research. This is due to economic conditions and the desirability of certain areas.’
Alex Bannister, group economist at Nationwide, believes the North-South divide could narrow over a longer time scale, but says London has got a head start.
He said: ‘The level of prices in London are so much higher than in the North East to begin with. If prices in London went up by the UK forecast of 6% this year, then for the North East to close the gap by £1, the price growth would have to be 17.5%. It could happen over a longer period, but the gap at the moment is wider than it has ever been. The gap will never close in a significant way ‘ you would need years of growth.’
Ellis agreed: ‘In the short term there will be some narrowing of the North-South divide, but the divide will persist and there is no reason to suspect that it will not. We will see more of a slowdown in the market. House prices have risen so sharply in the South there is no scope for them to continue rising so rapidly whereas there is scope for the North to catch up.’
During the fourth quarter last year, Halifax looked at the gap between the price of a London property and one in its cheapest region, which is the North East. The gap had increased from £94,000 at the end of 2000 to just under £110,000 at the end of last year ‘ an increase of 16%.
Bannister said: ‘London prices are so far ahead we do expect the capital to be held back this year, as the top end of the market has been held back by weaker bonuses, global influences and affordability.’
house price growth
Top five towns by % increase
Thames Ditton (South East)
Teddington (Greater London)
Shepton Mallet (South West)
Thame (South East)
Lisburn (Northern Ireland)
Bottom five towns by % increase
Cottingham (Yorks & The Humber)