A report this week has caught the attention of property investors with the revelation that there are over 520,000 British homeowners with a property worth in excess of £1 million. This is an increase of 8.3% last year and confirms the fact that the UK property market is still relatively strong. In many ways the UK property market continues to surprise on the upside with economic woes often overlooked as the property gravy train continues.
What other revelations does this report reveal?
There are some interesting snippets regarding the UK property market with confirmation there are nearly 11,000 streets where the average property price exceeds £1 million. As you might expect, a whopping 43% of these are located in London. It will also come as no surprise to learn that the most expensive street in the UK is situated in London being Kensington Palace Gardens where the average property is worth a staggering £42.5 million!
While the vast majority of streets where the average property is valued at in excess of £1 million are situated in London there are 121 in Scotland, 17 in Wales and just four in Northern Ireland. This certainly shows us where the most lucrative local property markets in the UK are located.
Is the North-South divide growing?
There is no doubt that London and the South of England dominate not only the UK economy but also the UK property market. Many experts are concerned that the so-called North-South divide is growing in relation to many different areas of life in the UK. Indeed it is worth noting that plans to introduce a “northern powerhouse” with more control over the local economy, taxes, etc seems to have been put on the backburner by the UK government.
Unless we see significant investment not only in property markets outside the South of England and London but also local economies, how can we expect the North-South divide to reduce?
UK property market
If we look back over the last decade the UK property market has been through some significant highs and lows. Just prior to the 2008 US mortgage crisis UK property prices were riding the crest of a wave and then suddenly the worldwide economy collapsed. We then saw banking issues, regulatory changes and now we have the European debacle which seems never ending. However, during all of these difficulties the UK property market has remained relatively strong and indeed as we have mentioned on numerous occasions it seems to have attracted a “safe haven” status.
The basic fact is that not enough new houses are being built in the UK to satisfy demand which means that property prices are likely to remain on an upward path in the longer term. The issue of increasing the number of new builds is something which politicians have promised to address time and time again but talk is cheap. This is not an issue which can be resolved overnight therefore there will be ever-increasing demand for UK property which will push many potential first-time buyers towards rented accommodation due to the affordability factor.
We then have the creation of a self-fulfilling prophecy pushing prices higher and higher.