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House Prices: The North/South Gap Widens





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Historically, you have always had to pay more for a house in the South of England.  In 1995 the average house price in London was £92,212, £72,018 in the South East and only £55,057 in the North East.  Go forward to the present and those figures come in at £302,411 for London, £187,124 for the South East and £106,769 for the North East.  Using these figures we can see that the cost of property in London has more than tripled, in the South East it has increased by more than two and a half times, whilst in the North East they have not quite doubled.


The average house price data suggests that the divide is becoming even more pronounced, with recent data from the Land Registry and the Royal Institute of Chartered Surveyors (RICS) suggesting that prices had risen in London, the South East, the Midlands, East Anglia, whilst continuing to fall in areas such as the North West, Yorkshire and the North East.  Analysing this data, Ian Perry from RICS said: “The market has come awake sooner in the South East.  This is partly a result of homeowners there having more equity in their properties because house prices have risen more over the years down south.  People also earn more in the South, but basic living costs are not that different, so buyers have more disposable income to put towards house purchases.”


The more equity and more income in favour of homeowners in the south would appear to be very significant when looking at the country’s lending figures.  The Nationwide loan only 27% of their total mortgage lending to northerners – almost all of the rest is lent out down south.  This trend is backed up by the Council of Mortgage Lenders (CML) who say that borrowers in the South borrow less as a percentage of the property value at 71%, compared to 75% in the North.


All this should make houses in the North more affordable, but apparently this isn’t the case.  Bigger increases in average earnings in the South and East, coupled with recent house price falls make property there as affordable as 2000 and 2001 according to propertyfinder.com.  Further North, relative to income, house price affordability has only stepped back two or three years.  Bromley and Havering, both near London, top the affordability league, whilst Hartlepool and Berwick-up-on-Tweed rank as the least affordable.


All this said however, it may well be possible that this is simply a snap shot of the current market conditions.  Property trends normally tend to start in London and then ripple outwards, finally making their way up north.  The slight recovery or bottoming out of the market that the South is currently experiencing may well manifest itself up North in the coming months to help balance the equation.


What a £250,000 London Home Would Cost in Other Regions


Central London

£250,000

Scotland

£147,951

Greater London

£213,135

Yorkshire & Humberside

£144,459

South East

£182,330

North

£140,765

South West

£173,314

Northern Ireland

£140,410

West Midlands

£151,715

East Midlands

£135,353

North West

£150,366

Wales

£133,868

East Anglia

£149,465

 

 

(Source: Nationwide)