If you read the property news you are likely under the impression that the vast majority of houses in the UK have recovered from losses sustained after the 2007 worldwide economic collapse. The general impression seems to be that house prices have clawed their way back into positive territory, compared to prices in 2007, but is this really the case? Is the mass media yet again overlooking the North-South divide and giving a biased impression of the UK housing market?
A report by online estate agents housesimple.com seems to give a broader impression of the UK housing market rather than focusing on London and the South of England. The report took in more than 60 major towns and cities in England and Wales comparing prices in June 2007 to those in June 2017. Would you be surprised to learn that a staggering 28% of those towns and cities covered are yet to see house prices reach their 2007 highs?
The report shows that of the 28% of towns yet to reach their 2007 highs over a third of these, 17 to be exact, are in the North of England. These include:
Stockton on Tees
Newcastle upon Tyne
It is astounding to think that a decade after the economic collapse those who bought properties at the peak of the market in 2007 may still be sitting in negative equity. When you also learn that a vibrant city such as Liverpool has also struggled, with prices still 10% below the average of 2007, it really does highlight the never-ending North-South divide.
As if this was not bad enough, during the last decade we have seen average London house prices increase by a staggering 69%. Those who complain that London property prices are under pressure and times are hard should look again at the long-term trend of London property prices compared to those in the North of England. Time and time again so-called “experts” have called the top of the London property market only for the sector to take a breather and then push forward again.
If you sit back and look at the England and Wales housing market from a distance, the North of England does not look overvalued although perhaps the same cannot be said of parts of London and the South of England?
Why do investment trends never change?
It is a little surprising to see investors sticking to property markets in London and the South of England as their bread-and-butter. Surely when comparing like-for-like, there would appear to be better value in the North of England and some areas of Wales?
The problem is, and this is something we have touched on before, property prices obviously reflect average wages and demand in the area but they also reflect employment prospects. London and the South-East of England are the hub of not only the English economy but the UK economy as a whole. As a consequence they will always attract more employment opportunities, more inward investment and more foreign investment. Until companies open their eyes to the attractions of the Midlands and the North of England in particular, this is unlikely to change. People will always flock to employment hotspots which creates demand for rental property and pushing prices higher. Sounds so simple when you put it like that….