Birmingham, Manchester house price growth to outstrip London as it feels pain from Brexit fallout
Home prices in London fall by as much as 15pc, while the northwest England had the fastest growing market
The north-south divide in house prices is beginning to narrow as the booming London property market fizzles out, according to experts who forecast parts of northern England are set to maintain a recent increase in value.
Growth in house prices in the capital is expected to slip below the national average, continuing a slide triggered by the Brexit vote. This will result in further downgrades in parts of the city with the greatest concentrations of luxury flats, the experts said. Meanwhile, major regional cities such as Manchester and Birmingham and their suburbs are expected to grow faster than the rest of the country, albeit rising from a lower level than London.
Nitesh Patel, a housing economist at Halifax bank, said: “Affordability issues suggest that price growth will continue to remain low. [But] outside London, there are few signs of significant stresses.”
Savills, the estate agency group, forecasts average UK house price growth of 14 per cent over the next five years – but with London significantly underperforming the rest of the country by growing at roughly half that rate. In sharp contrast, the northwest is projected to see the strongest growth in Britain at about 18 per cent.
Rupert des Forges, a partner at the property agents Knight Frank, said: “You’ve got a generation of people who, unless they’re helped, are really going to struggle to get into London. You’re going to see an almost democratisation of house prices across the country as a result.”
The comments came as a survey this week showed that house prices in prime parts of London had tumbled deeply over the past year, with Wandsworth – which includes much of Clapham, Balham and Putney – falling nearly 15 per cent. By contrast, the figures from estate agency Your Move showed that the northwest was now the fastest growing market in England and Wales with prices in Blackburn growing 16.4 per cent.
Years of rapid growth in London have made the capital increasingly unaffordable, particularly for younger buyers who are forced to rent expensive homes in the city while struggling to save for a deposit. The average home in the capital costs £484,000 (US$76,280), according to the Office for National Statistics, almost double the average for England as a whole of £244,000.
House prices in relation to average earnings in London are at roughly nine times annual average earnings, while in the northwest they are about five times more expensive than average yearly pay.
Andrew Montlake of the mortgage broker Coreco, said: “Things started to change, with companies looking at moving to other areas. That has to be positive – everyone knows there needs to be some kind of rebalancing.”
Susan Wolstenholme, as an estate agent in Blackburn, Lancashire, for 20 years, was there for the 2008 crash in house prices and the subsequent years of stagnation. But towards the end of 2017, she said, things started to change.
“Since January we’ve got over asking price on in excess of a dozen houses,” she said. “Particularly on the south side of town, we’re getting at least asking price or above.”