There is an increasing disparity in the UK residential property market recovery which is strongly biased towards the top end of the sector, according to new research.
The much talked about price surge is at the top 20% of property areas by value only two of which are outside London, the Chesterton Humberts/cebr February House Price Poll of Polls report shows.
House prices in five of the most expensive areas, which are all in London, increased by an average 2.3% between January and February. In comparison, all of the five least expensive areas showed house prices falling month-on-month, it also shows.
And the same three regions of the UK that experienced falling prices last month saw price declines again this month. The North East, Scotland and Northern Ireland all observed price falls over the month to February, in contrast to the small increase in the national average.
Property prices in the north and south of England continued to diverge in February. House prices in the North West, North East and Yorkshire and Humber increased by a group average of 0.2% over the month to February. Prices in the more expensive regions of the South West, South East and London increased by a group average of 0.7% over the month.
The research also shows that the price of a typical house in London grew by 0.9% over the month to February following an increase of 2.3% in each of the two previous months. This was the second fastest rate of growth of any region in February, bringing the typical price of a house in the capital to £333,371, the highest since July 2008.
All but two of the 32 local authorities in London experienced price increases in February from January. Prices are now lower than they were at the same time last year in only four local authorities in London.
‘The fractured nature of the current property market which we identified several months ago is becoming more defined and indications are that the disparity may increase. London property values are likely to continue to benefit from a weak pound, as foreign buyers will continue to find prices attractive but this will primarily only be in the core Central London postcodes and other areas of traditionally high value, such as Bedford Park, Hampstead and Barnes,’ said Robert Bartlett, chief executive of Chesterton Humberts.
He pointed out that areas without foreign buyer demand have not seen a price gain since the market bottom was reached in 2009 and these areas will continue to bump along the bottom as owners who are not under pressure to sell, by far the majority, will simply hold on, continuing the current trend of significantly reduced sales volumes.
‘However, if the pound continues to lose value, leading to inflation, higher interbank lending rates and higher interest rates for mortgage payers, this is likely to suppress buyer affordability and increase housing supply through placing pressure on mortgage payers. I am sure that much will depend upon the City’s interpretation of the forthcoming election event and we need to be braced for a sudden correction in the market as the summer unfolds if no authoritative action is taken to deal with the ongoing economic crisis,’ he added.
The emergence of two property markets is making it difficult to identify an overall property trend, according to Douglas McWilliams, Chief Executive of CEBR. ‘Different factors can be seen to impact differently on each property market. Examples are the end of the stamp duty holiday which impacts the lower end market and will have minimal, if any, impact on the higher end and city bonuses, which are more likely to create activity at the higher end,’ he said.