Olympics high jump for house prices in south

The Olympics are being blamed for an increase in the north/south divide on house prices.

Jobs and investment in areas more closely associated next year’s sporting extravaganza are driving up property prices in the south.

Houses in the north are not enjoying similar rises.

Despite the national rise in the last month of 2.8 per cent (£6,533) in new sellers’ asking prices, a two-tier UK housing market is rapidly emerging.

Rightmove says the average house in southern England is priced at £336,743, against £164,347 in the North.

In the past year, the website claims, prices in the south rose 4.7 per cent to set new records while the north fell back 0.7 per cent to levels first achieved in May 2005.

One glimmer of hope is that mortgage approvals have regained the level of November 2009, indicating a slight easing in the mortgage famine, with low-rate deals likely to help home movers in the deposit-rich south while public sector job losses hit prices in the north.

In compiling its survey, Rightmove measured 98,402 asking prices – about 90 per cent of the UK market – which were put on sale by agents in the period September 11 to October 8, and advertised on Rightmove.co.uk.

The 2.8 per cent monthly rise in new sellers’ average asking prices and a two-year high in mortgage approvals are positive signals, though they mask the toughness of the market in the north.

The gulf in average asking prices in the two regions is now the highest Rightmove has ever recorded, it revealed.

Rightmove director Miles Shipside says: “Wider access to mortgages and rising asking prices are early signs of increasing demand, giving homeowners some grounds for hope of a market recovery. However, there is further evidence of the two-tier twist which is dogging the return to more widespread liquidity in the housing market.

“While those in the affluent south may have cause to celebrate prices being well ahead of this time last year, prices in the north continue to go backwards, leaving the widest price gap ever.

“For the average asking price of a property in the South, you could now buy two average properties in the north and have change left over to buy new carpets and curtains.”

Surge

While there was a 2.8 per cent national average increase in new sellers’ asking prices compared to last month, the driver of the rise was a 4.7 per cent surge in southern regions (London, the south east, south west, East Anglia).

In contrast, northern regions (Wales, West Midlands, East Midlands, Yorkshire and Humberside, and the North West) actually showed a 0.7 per cent month-on-month fall.

The south’s ability to shrug off the global financial crisis and credit squeeze is highlighted by property coming to the market at all-time price highs in both London and south-east regions.

London’s £450,210 is 2.6 per cent higher than the previous record set in June this year, while the £317,055 seen in the south east is up 0.2 per cent on the previous high in May 2008.

Shipside comments: “Existing homeowners in the highest priced regions are seeing the value of their bricks and mortar increase even further, though it is at the expense of buyers who are faced with the highest ever asking prices.

“Those trading up will benefit from already being on the housing ladder, though the gap to trade up to the next rung is a bigger financial leap when prices rise like this and desirable homes are in short supply.

“Those who are not property owners, such as first-time buyers or those taking an ownership break in the rented sector, will either have to spend more or compromise on what they can afford.”

Compared to the beginning of the credit crunch four years ago, prices of properties coming to market have risen by 5.4 per cent in the South but fallen by 9.6 per cent in the north.

In the last year, sellers coming to the market in the north have on average reduced asking prices by 2.6 per cent, while those in the South have put them up by 3.9 per cent.

Price decreases usually result when negative sentiment, influenced by uncertainty around employment and tightening of finances, rises. Of seven UK regions with the highest unemployment levels, six are in the north, so employment concerns, especially in the public sector, push prices and activity down in many northern areas.

Shipside added: “With record prices in the capital, some will be priced out of the best areas and will either have to stay put or look for value further afield. lf they are looking to move north, the growing price gap will let them buy a lot more house for their money.”