When it comes to house price growth, the likes of London and Oxford have experienced the lion's share compared to northern cities such as Liverpool, Sheffield and Glasgow. However, property analyst Hometrack reports that the north-south divide may finally be closing, as the exorbitant prices of properties in London force many to look to the north for more affordable accommodation.
As the north receives more interest from property investors, so do its property values begin to climb at a quicker rate, while price growth in the south inevitably slows.
War of the prices
This is Money cites Richard Donnell, director of research at Hometrack, who says that house price growth is a strong reflection of the strength of a city's economy, especially since a strong economy contributes to greater demand for housing. The recession brought cities throughout the UK to their knees, but, for the most part, northern cities took longer to recover than the south.
Average house prices in London have risen from £144,278 to £405,500 since April 2009, with Oxford and Cambridge following close behind with an average price increase of £100,000. In contrast, property prices in Sheffield only began to recover around three years ago, while Glasgow, Leeds, Newcastle, Edinburgh and Liverpool only saw an upswing in the past two years.
The Telegraph puts things in perspective by reporting that the price you'd pay for a three-bedroom house in one of London's more expensive areas could buy you 25 homes of the same size in Scotland. Hometrack found that properties in London cost an average of five times more than what they would cost in cities like Edinburgh, Glasgow, Manchester and Birmingham.
The north will rise
The laws of economics and gravity have something in common; they both dictate that if something rises too high, there can only be one direction left for it to go. The affordability of properties in northern cities leaves room for prices to climb, while in high growth areas like London prices have risen too high for many to afford, reaching around 12 times the average earnings of home seekers. A decrease in the climb is inevitable, followed, hopefully, by a decrease in prices too.
House prices in London rose 7.9% in 2014, but just 1.1% in the last quarter of the year, indicating a slowdown in price growth. Meanwhile, in the north, the combination of pent-up demand and cheaper mortgage rates have contributed to increased growth in housing prices.
Graham Davidson, managing director of Sequre Property Investment, says, “… cities such as Sheffield and Liverpool that only started to see recovery in the last few years, are now seeing house price inflation growing at a faster rate of 0.6% and 0.7%, even higher than London.”
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