The UK property market is undoubtedly in a state of recovery but average growth statistics can often mask troubling regional disparities. Indeed, for several months price rises and increases in activity have been largely centred around London, with the rest of country often posting losses. However, data has begun to suggest that the recovery is starting to spread across Britain.
A study from the Centre of Economics and Business Research (CEBR) has shown that while growth is firmly established in London and the south-east, government policies to support lending are helping to drive the recovery elsewhere. While London tops the growth charts, with rises of 43.5 per cent expected between 2013 and 2018, the east of England should see gains of 27.6 per cent - just 0.1 percentage point lower than the 27.7 per cent rise forecast for the south-east. Scotland should also see impressive growth of 27.5 per cent over the next five years, while Northern Ireland should also see activity rise.
This is particularly significant, as house prices in Northern Ireland have halved since their 2007 third quarter peak. Falls have been slowing since early 2011 but it wasn't until Q2 2013 that annual gains were noted - the first time since Q1 of 2008.
Daniel Solomon, CEBR economist and main author of the report, said: "Government support and an improving economic climate will provide an invigorating shot in the arm for the housing market over the coming years.’
"Northern Irish house prices have recently posted their first annual gain in years and the housing market recovery is finally moving beyond London and the South East. This should make homeowners up and down the country feel that bit wealthier, supporting consumer confidence."
Not the whole story
Not everyone is confident that the recovery is going in the right direction outside of London, however. PwC claims the disparity between the capital and the rest of the country won't ease over the next eight years. What's more, the performance of eastern and southern regions is likely to continue to far outstrip more northerly and westerly areas. Since the market crash, London has only seen prices drop by around nine per cent, which is approximately half the rate of decline for the UK as a whole.
Furthermore, PwC expects that a full market recovery won't actually occur until 2021. Although house prices will be seven per cent above their 2007 peak by 2015, based on Office for National Statistics data, when adjusted for consumer price inflation, they will actually be 15 per cent lower.
Slowly but surely
Ultimately, it appears that unlocking the recovery from London's borders will be a case of slowly but surely. John Hawksworth, chief economist at PwC, said: "Over the next few years, we expect the recent gradual recovery in UK house prices to continue, although affordability will remain an issue for many first time buyers. While mortgage approvals are picking up gradually, housing completions remain subdued. And although recently introduced government initiatives to support the mortgage market are likely to boost demand in the short term, in the longer term other measures will be needed to address more fundamental problems related to lack of housing supply."
Regional property investment
So is it worth investing in property beyond the capital and the south-east? For those looking to maximise yields and get ahead of the curve, the answer is certainly yes. After all, it always pays to have a diverse portfolio. Leeds and Manchester are two Northern cities on the up, with strong business prospects and large student populations. In Scotland, Aberdeen is one of the top markets, thanks to the energy boom. Demand is particularly high in the granite city for rental accommodation and hotels, as the area tries to cater for its burgeoning workforce.
Meanwhile, Bristol has also been earmarked for future growth, with a plan centred around transport, infrastructure, planning for a growing population and attitude recently unveiled to take the city into the future. According to Ned Cussen, director at Jones Lang LaSalle's Bristol office, this will ensure the city is capable of becoming the most economically successful place outside of London.
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- Monday 21 October 2013