North South housing divide continues to grow

It will come as no surprise to those who follow the UK property market that the so-called north-south divide continues to grow. While figures from the Nationwide Building Society show that the average property in the UK is now valued at £196,999, an increase of 4.5% over the last 12 months, the gap between North and South of England continues to grow. The gap is now a staggering £159,000 which is an increase of £23,000 over the last 12 months.

When you bear in mind that the difference between houses in the North of England and the South of England has nearly trebled over the last decade when will this end?

Why the large gap?

The figures from the Nationwide perfectly illustrate the cost of living, standard of living, wages and employment markets in the North and the South of England. There is no doubt that London and the South of England are the engine room of the UK economy and as such attract most inward investment. This in itself has created significant employment opportunities in the South of England very often at the expense of the North where an array of manual labour jobs have disappeared over the last 50 years.

It would be wrong to suggest that all areas of the North of England are struggling, we only need to look at the car industry in Sunderland and the Nissan venture, but on the whole there are challenges.

Real estate investment

The fact is that if people are working and living in the South of England then they need somewhere to stay. Even if those employed in the region do not acquire properties directly, and decide to rent, they are encouraging buy to let investors which in turn is pushing the price of property higher in the South of England. You could argue that investments are not always made on a purely facts and figures basis where people need accommodation when working in the region.

It is also worth noting that in general the number of new builds across the UK is significantly lower than that required to fulfil demand. Therefore, not only is the South of England attracting more and more people looking for highly paid employment but this is injecting significant demand into regional property markets, pushing prices higher and higher, due to a shortage of housing stock.

Will the North South divide continue to grow?

The report from the Nationwide Building Society also highlights the fact that over the last six years property prices in the South of England have consistently outperformed their northern counterparts. Indeed the average annual increase in the South comes in at 8.9% against a below average inflation figure of just 1.6% in the North. In the majority of the six years in question the value of property in the North of England would do well to maintain its real value when taking inflation into account.

At this moment in time it is difficult to see a short-term solution for this long-term problem. After all, what government would take jobs away from the South of England which is the hub of the UK economy and place them in the North? Would this be a vote winner in the South?

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