North south house prices set to further divide
The divide between house prices in the north and south of England will widen this year, according to economists.
The Centre for Economics and Business Research predicts interest in the London market will continue to push house prices up in the capital while the continued recession will push them down in the north.
In its quarterly report, CEBR Consumer insights, released today, the forecaster notes London prices have been rising and believes this will be boosted by international demand for UK property as the euro zone turmoil increases.
Douglas McWilliams, chief executive of CEBR, said: ‘Demand in the London market remains resilient, with the on-going euro zone drama piquing international interest in the capital.
‘Furthermore, we can expect an abundance of affluent French citizens to be shopping for homes in London if President Hollande’s proposed 75 per cent top rate of income tax is enacted.’
CEBR believes wealthy investors will seek ‘save havens’ for their assets and will look to London and the south east of England to make property purchases.
This will be buoyed, CEBR predicts, by historically low interest rates and a lack of housing supply.
The forecaster also suggests prices will be pushed up by a strong rental market, noting Office of National Statistics figures show annual rent inflation has held steady at 3.1 per cent since the turn of the year.
Shehan Mohamed, housing economist at CEBR, said: ‘While the cost of renting creeps upwards, house prices continue to fall in real terms.
‘This disparity has two effects: purchasing a property is incentivised as rents become dearer, while the buy-to-let market is stimulated as rental yields increase.’
Average UK house price, annual change*
UK regional house prices, annual change*
|Yorkshire & The Humber||-0.4%||-1.0%|
*Source: Department for Communities and Local Government, Cebr forecasts