North-South property divide to narrow: Northern cities will see prices accelerate in 2015 as affordable homes are snapped up
02-21-2015
- House prices in London and Oxford are now 12 times averages earnings
- UK average house prices re 6.3 times average earnings
By Matt West for www.Thisismoney.co.uk
The momentum behind the housing market recovery is shifting away from cities in southern England and heading further north to Liverpool, Sheffield and Glasgow, a report published today suggests.
Property analyst Hometrack said the strong property price growth seen in cities such as London and Oxford in recent years would now be forced to slow.
It said average house prices in both London and Oxford were now so high that they were more than 12 times local annual earnings - almost double the UK average of 6.3 times wages.
Hometrack said the housing markets in many of the UK's main cities, including London, Aberdeen, Cambridge, Oxford, Bristol, Cardiff, Manchester and Birmingham, had all reached a trough around six years ago, after which time, prices started to recover.
Plateau: Hometrack said the pace of change in house prices at a national level had slowed
In contrast, property prices in Sheffield only began to recover around three years ago, while those in Glasgow, Leeds, Edinburgh, Newcastle and Liverpool have only just started to recover in the last two years and those in Belfast only began edging up a little over 18 months ago.
These cities further back on the recovery curve tend to have house prices that are more affordable when compared with earnings, averaging between three and six times local wages, said Hometrack.
For sale signs outside homes in a street in Loanhead near Edinburgh. Property prices in Scotland continue to rise and Scotland's house price inflation remains above the UK average. PRESS ASSOCIATION Photo.
Picture date: Friday 5 May, 2006. Standalone photo. Photo credit should read: David Cheskin/PA.Mortgages slump to 21-month low but fixed rate price war and...Picture: Craig Hibbert 21-1-15
Average house prices in London have risen £144,278 to £405,500 since the market in the capital bottomed out in April 2009.
After London, Oxford and Cambridge have seen the strongest house price growth since values there started to recover, with a typical home buyer in these areas facing paying £100,000 more than they would have done six years ago.
Dominance: In the last year northern cities saw greater growth in property values than those in the south
But not all cities where house prices have been recovering for some time have seen strong growth in values over that period.
Manchester and Birmingham have seen property values have grown by around £13,000 over the six years since the recovery started in these areas.
Richard Donnell, director of research at Hometrack, said: 'House price growth within cities reflects the strength of their local economies and the demand for housing.
North v South: Cities in the north of the UK have seen more rapid house price growth in the last three months
'While Manchester and Birmingham saw prices bottom out in 2009, growth has been more subdued than in other cities where employment growth has been stronger and the influence of the London economy has been greater.
'Elsewhere, house prices continue to rise off a low base as pent-up demand returns to the market, supported by record low mortgage rates, an improving outlook and rising earnings.'
The research comes a day after a report suggested mortgage lending fell to a 21 month low in January. The Council of Mortgage Lenders said despite the drop in mortgage lending banks and building societies still expect the market to strengthen in the year ahead, a survey showed today.
The market is expected to be buoyed by borrowers taking advantage of the current crop of low rates that allow some homeowners to fix for two years below 1.2 per cent or for five years below 2.2 per cent.
Earlier this week the Office for National Statistics said house prices rose by 9.8% in the year to December. That was slightly lower than November's rate, which stood at 9.9%, but prices were still growing 'strongly', the ONS said.
Meanwhile, a fresh mortgage price war, which broke out between lenders last autumn, has intensified further this year, with many lenders offering their lowest ever rates on certain deals.