Gap between listing prices in London and rest of UK widens

The gap between London house prices and the rest of the UK has continued to reach new highs with the latest index showing the regional divergence is growing.

Overall UK house prices increased by 0.5% in September and annual house price growth increased to 3.8% in September, the data from leading lender the Nationwide shows.

But on a quarterly basis London house price growth increased to 10.6% in the third quarter of the year, up from 7.3% in the second quarter of 2015. This compares to an average house price rise in England of 1.8% in the third quarter.

There was a mixed picture across the regions. The rate of annual house price growth accelerated in Southern England, particularly in London, but continued to slow in the Midlands and most Northern areas.

London was the strongest performing region and annual price growth also accelerated in the neighbouring Outer Metropolitan region from 6.8% to 9.5%. The price of a typical home in London at £443,399 is more than double the UK aggregate and more than three and a half times the price of the typical listing in the cheapest UK region which is the North of England.

The North West was the weakest performing English region, with prices down 0.6% year on year. House prices continued to recover in Northern Ireland, with annual growth of 6.5% in the third quarter although average prices are still 44% below their pre-crisis peak.

Wales saw a 1.9% year on year increase in average prices, a slight improvement compared with recent quarters. Scotland was the weakest performing region for the second quarter in a row, with a 1.3% year on year fall, similar to the 1% annual decline recorded in the second quarter.

Price growth in the South exceeded that in the North for the 26th consecutive quarter. Prices in Southern England were up 8% year on year, whilst in Northern England prices rose by just 1%.

In cash terms, the gap in average prices between the South and the North of England is at a record high, exceeding £150,000 for the first time, with average prices in the South now twice as high as those in the North.

‘The data in recent months provides some encouragement that the pace of house price increases may be stabilising close to the pace of earnings growth. However, the risk remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability,’ said Robert Gardner, Nationwide’s chief economist.

‘Indeed, in recent months surveyors have reported historically low levels of listings for sale and increased new buyer enquiries. Therefore it is unsurprising that most surveyors expect a pickup in house price growth in the months ahead,’ he pointed out.

‘The slowdown in house price growth since the middle of 2014 has not been confined to, nor has it been driven primarily by, developments in London. The capital has continued to see price growth at or above the rate in the UK overall over the past four quarters and the annual rate of price growth in London is currently the highest in the country,’ he said.

‘Taking a wider view, regional house price performance was mixed in the third quarter. Eight UK regions recorded a slowdown in the annual rate of growth, while five saw acceleration. Most parts of the country continued to see annual house price gains but the exceptions were Scotland and the North West which both recorded small declines,’ Gardner added.

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Source: Property News Spain