House price growth will accelerate at a much greater pace in the UK between now and 2017, according to research from Savills. The five-year housing market forecast put house price rises at an average of 18.1 per cent over the next four years, compared to the original estimate of 11.5 per cent. However, despite significant increases in value nationwide, the north-south divide is becoming even more entrenched.
It is expected regional variations will range from strong 25.1 per cent growth in mainstream London, to just 12.5 per cent in the north-east. Lucian Cook, director of Savills residential research, said: "The gap between London and the regional market is extremely wide in a historic context and the anticipated distribution of the economic recovery - with London and the south-east leading - is likely to stretch this further."
Already, mainstream London values stand at around 4.8 per cent above their previous peak but the north of England and Yorkshire and the Humber won't make it back their 2007 peak values within the next five years. In fact, they will continue to fall marginally between now and 2018. "Current measures such as repossession levels and transaction levels indicate that the regions of the Midlands and the north are not in a position to match the price growth anticipated further south," Mr Cook explained.
However, it is hoped that once interest rate rises start to have an impact, house price growth will begin to converge before markets that have traditionally found themselves lagging behind begin to catch up. Support of regional markets will be integral and at a national level schemes like Help to Buy are already starting to have an impact by increasing demand for properties. Increased loan availability and a lack of stock is driving prices up and will continue to do so. While there have, in the past, been fears a bubble will be created, experts claim a cap on prices will stay in place, particularly as efforts are made to increase home building.
- Friday 02 August 2013