Housing costs increased noticeably in May, with Scotland and the Northern regions experiencing substantial price growth, whereas London faced some struggles.
In the ever-evolving landscape of the UK property market, a significant disparity between house price growth in the north and south of the country has emerged. This divide, influenced by a combination of economic, demographic, and structural factors, has led to distinct regional trends.
## Economic Factors
The economic growth in Northern regions, particularly in sectors like technology and manufacturing, has contributed to higher demand for housing. On the other hand, the cost of living in Southern England, particularly in cities like London, is significantly higher, which can deter new buyers and slow down growth.
## Demographic Factors
Northern regions are attracting more first-time buyers due to lower house prices and a more affordable lifestyle, boosting demand and growth. Conversely, higher prices in Southern England make it challenging for first-time buyers without external financial support, reducing demand for housing.
## Structural Factors
Regional policies and investment can influence growth. For example, investment in infrastructure and local economies can attract more residents and businesses to certain areas. Anticipated rate cuts by the Bank of England could further boost affordable regions, as lower interest rates make mortgages more accessible.
## Impact on the Property Market
The disparity creates opportunities for contrarian investors who can capitalize on the undervalued regions in the north. The north-south divide affects market dynamics, with stronger growth in the north potentially leading to increased market activity and turnover, while the south experiences slower activity. Buyers have more purchasing power in the north, which can lead to quicker property sales and a more dynamic market compared to the south.
## London's Property Market
The London market, once heavily influenced by foreign buyers, is currently witnessing a steady exodus of the global elite. This exodus has boosted supply and cooled demand in London's prime market, with many sellers being forced to cut asking prices or agree to significant discounts in order to sell.
Despite a 1.4% decrease in average house prices from May 2024, the average house price in London still stands at £566,000, marking a 2.2% increase year-on-year. The average new build price is £419,862, a staggering 29.9% increase year-on-year.
## Nationwide Trends
Across the UK, the average house price was £269,000 in May, which is £10,000 higher than 12 months ago. House prices in the South West and South East of England are only up 1.9 and 2.1 per cent over the year, respectively. In contrast, house prices in the North East of England are up 6.3 per cent year-on-year, with the average property selling for £159,142.
Scotland and Wales are also recording higher levels of house price growth, up 6.4 per cent and 5.1 per cent over the past 12 months, respectively.
In the year to May, house prices went up by 3.9 per cent, according to the figures. The average detached house price is up 5.4% year-on-year, while the average flat and maisonette has only risen 1.5%.
As the property market continues to readjust following the April rise in stamp duty, it's more important than ever for sellers to listen to agent advice on pricing. Good property priced correctly will sell, but in the current climate, it's crucial to remain competitive and realistic to secure a sale.
- The increasing demand for housing in Northern regions, influenced by economic growth and attractive prices, provides opportunities for investors to finance property in undervalued areas.
- Financial institutions might consider offering more competitive mortgages in regions outside of London, as lower interest rates could stimulate demand and housing market activity, particularly in areasexperiencing stronger growth, such as the North.
- With the increasing demand for affordable housing and a growing interest in investing in regional markets, the housing market could witness a shift in focus from high-end real estate in cities like London to property investments in other parts of the UK.
