While the term “news” may suggest that we’re going to hear about something different and, indeed, new, often, when news comes, it’s essentially confirming what we already knew. The comment could certainly be made about the latest data from the property market, in the form of the UK Cities House Price Index and an analysis undertaken by property experts Savills, both of which indicate that the London property market is continuing to stagnate, while the Northern Powerhouse is, indeed powering ahead.
London overall stays more or less where it is while the north shows compelling growth
According to the UK Cities House Price Index (which covers a total of 20 cities), the UK overall saw house price inflation of 3.4% while UK cities overall saw house price inflation of 3.2%. As is frequently the case, however, the term “overall” covers massive variations between cities.
Oil-focused Aberdeen, for example, has seen house price deflation of 4.4% over the last 12 months (although it has been making very modest gains over the last three months and over the last month), whereas more diversified and regenerating Liverpool saw house price inflation of 6.9% over the last year with its near neighbours Birmingham and Manchester close behind on 6.5% and 6.2% respectively.
Other northern cities also put in a good showing, especially Leicester and Sheffield. London, meanwhile, is essentially limping along with house price deflation of 0.4% over the last 12 months and very negligible house price inflation over the last three months and over the last month.
Savills predicts more of the same over the coming years
The London property market has three clear issues, only one of which could feasibly be resolved in the near future and that is the uncertainty over Brexit. It’s probably safe to say that the softer the nature of Brexit, the happier London real estate professionals will be.
The others, however, are straightforward affordability and competition from the north. Up until the start of the Northern Powerhouse initiative, there was an extent to which London house prices could be justified by the fact that the capital was able to offer career opportunities which were simply not available in the north.
Now the northern economy is going full steam ahead there are vastly more opportunities up there, young people from the north are more likely to stay where they are and, indeed, young people from further south are more likely to head to the north where property remains much more affordable, in spite of the extensive capital growth, as it is coming off a vastly lower base than in London.
Savills predicts that this situation will continue for at least the next five years with the result that investors in the north could see house price growth of over 20% by 2023 whereas investors in London are unlikely to see house price growth reach even 5% over the same period. Savills also predicts that the high demand for rental property will continue, which bodes well for buy-to-let yields.
For more information please contact Indlu estate agents in Denton, Manchester.