A recently published report has suggested that the North-South property divide could be set to narrow. According to property analyst Hometrack, the momentum behind the housing market recovery is shifting away from southern England and heading north to cities such as Liverpool, Sheffield and Glasgow. The logic is that the cities in the south have reached their peak and that there is more room for growth in the north. Hometrack said that average house prices in both London and Oxford are now so high that they are more than twelve times local annual earnings. This is almost double the UK average of 6.3 times wages.
Property prices in many UK cities, such as London, Oxford, Cardiff, Manchester, Birmingham, Aberdeen, Cambridge and Bristol, reached a trough around six years ago, and have been rising in price ever since. However, in contrast, prices in Sheffield only started to recover three years ago, while those in Leeds, Glasgow, Edinburgh, Newcastle and Liverpool have been edging up for only two years. These cities that are further back on the recovery curve tend to have homes that are more affordable, in relation to average earnings in the area. As a result there is more room for property prices to push higher in these locations.
This research comes on the back of a report from the Council of Mortgage Lenders (CML), which suggested that mortgage lending had fallen to a 21-month low. However, despite this pessimistic news, most banks and building societies expect the market to strengthen in the year ahead. The market is expected to be buoyed by borrowers taking advantage of the current crop of low interest rate mortgages that offer a two year fixed rate below 1.2% or a five year fix at below 2.2%.
Source: thisismoney.co.uk, hometrack.com