MortgagesDec 30 2015

North/South house price gap widens by £23k

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North/South house price gap widens by £23k

UK annual house price growth increased to 4.5 per cent across December, according to data released by Nationwide.

The figure represents a 0.8 per cent increase against November’s figure of 3.7 per cent. This month’s average house price stood at £196,999 while November’s figure stood at £196,305.

Across the fourth quarter, London house price growth increased to 12.2 per cent in total.

Overall, the top performing region in 2015 was London.

Nationwide stated all regions except Scotland saw an increase in house prices in 2015 though all recorded slower rates of annual price growth than in 2014.

Moreover, London was the strongest performing region for the fifth year running, with average prices up 12 per cent year-on-year.

Nationwide reported average prices in the capital are now 50 per cent more than their pre-crisis peak in 2007, while in the UK overall prices are around 7 per cent greater.

Yorkshire and Humberside was the weakest performing English region with prices up 0.4 per cent year-on-year.

Scotland was the only region to see prices fall over the year, with prices down 1.9 per cent compared with the fourth quarter 2014.

Nationwide added the north versus south divide had widened even further in 2015, as average house prices in England increased by 2.2 per cent in the fourth quarter and were up 6.9 per cent year-on-year.

It added house price growth in the south exceeded that in the north for the 27th consecutive quarter.

Additionally, in cash terms, the gap in average prices between the south and the north of England widened further and now stands at nearly £159,000, around £23,000 higher than a year ago.

Robert Gardner, Nationwide’s chief economist, said: “After moderating during the first six months of 2015, house price growth remained in a narrow range between 3 per cent and 4.5 per cent in the second half of the year.

“This is broadly in line with earnings growth and close to the pace we would expect to prevail over the longer term.

“However, as we look ahead to 2016, the risks are skewed towards a modest acceleration in house price growth, at least at the national level, despite the likelihood of interest rate increases from the middle of next year.”

Mr Gardner added that further healthy gains in employment and rising wages are likely to bolster buyer sentiment, while borrowing costs are expected to rise only gradually.

“Overall, we expect UK house prices to rise by 3-6 per cent over the next twelve months. It remains an open question whether the striking divergence in regional house price performance evident in recent years will be maintained in 2016.”

Mark Posniak, managing director of Dragonfly Property Finance, said the relatively strong end to the year for UK property prices is likely to set the tone for 2016 as a whole.

He said: “For the price gap between the North and South of England to have widened by £23,000 shows the divide remains as strong as ever.

“Although London led the field once again in 2015, the affordability issue will act as a drag on demand throughout 2016, and other regions may well outperform it next year.”

Jeremy Leaf, former Royal Institution of Chartered Surveyors chairman and north London estate agent, said: “With the housing market drawing to a strong close in December, we are seeing a continuation of the trend of the past few months.

“Supply is simply not increasing fast enough to keep house prices in check and is making it harder for first-time buyers to get on the ladder.

“The situation is likely to get worse before it gets better in view of the build up to the increase in stamp duty in April, particularly as these figures are a little historic.”