London slump shrinks north-south divide in house prices

The north-south divide in house prices is beginning to narrow as the booming London property market fizzles out, according to experts who forecast parts of northern England are set to maintain a recent increase in value.

Growth in house prices in the capital is expected to slip below the national average, continuing a slide triggered by the Brexit vote. This will result in further downgrades in parts of the city with the greatest concentrations of luxury flats, the experts said. Meanwhile, major regional cities such as Manchester and Birmingham and their suburbs are expected to grow faster than the rest of the country, albeit rising from a lower level than London.

Nitesh Patel, a housing economist at Halifax bank, said: “Affordability issues suggest that price growth will continue to remain low. [But] outside London, there are few signs of significant stresses.”

Savills, the estate agency group, forecasts average UK house price growth of 14% over the next five years – but with London significantly underperforming the rest of the country by growing at roughly half that rate. In sharp contrast, the north-west is projected to see the strongest growth in Britain at about 18%.

Rupert des Forges, a partner at the estate agents Knight Frank, said: “You’ve got a generation of people who, unless they’re helped, are really going to struggle to get into London. You’re going to see an almost democratisation of house prices across the country as a result.”

The comments came as a survey this week showed that house prices in prime parts of London had tumbled deeply over the past year, with Wandsworth – which includes much of Clapham, Balham and Putney – falling nearly 15%. By contrast, the figures from estate agency Your Move showed that the north-west was now the fastest growing market in England and Wales with prices in Blackburn growing 16.4%.

Years of rapid growth in London have made the capital increasingly unaffordable, particularly for younger buyers who are forced to rent expensive homes in the city while struggling to save for a deposit. The average home in the capital costs £484,000, according to the Office for National Statistics, almost double the average for England as a whole of £244,000.

House prices in the north-west are forecast to rise twice as fast as in London over the next five years

Standfirst …

2018

2018-2022

0

5

10

15

North-west

North-east

Yorkshire and Humberside

Scotland

Wales

East Midlands

West Midlands

South-west

East Anglia

South-east

London

UK average

Guardian Graphic | Source: Savills

House prices in relation to average earnings in London are at roughly 9 times annual average earnings, while in the north-west they are about five times more expensive than average yearly pay.

Andrew Montlake of the mortgage broker Coreco, said: “Things started to change, with companies looking at moving to other areas. That has to be positive – everyone knows there needs to be some kind of rebalancing.”

Blackburn house prices surge on back of a ‘mini-boom’

Susan Wolstenholme has been working as an estate agent in Blackburn, Lancashire, for 20 years. She was there for the 2008 crash in house prices and the subsequent years of stagnation. But towards the end of 2017, she says, things started to change.

“Since January we’ve got over asking price on in excess of a dozen houses,” she says sitting in the upstairs office of the branch of Bridgfords that she manages in the town centre. “Particularly on the south side of town, we’re getting at least asking price or above.”

That sense was confirmed by this week’s figures from Your Move, which singled out Blackburn as the fastest growing area in England and Wales

Average house prices rose fastest in the north-west and fell furthest in London over the past year

Prices in the north-west were up 4.6% on average from January 2017 to January 2018, while London prices fell 2.6%

-0.7

+4.6%

+1.8

+2.5

+1.9

+1.5

+3.0

-0.5

+4.1

-2.6%

The pattern was repeated on a more local level with Blackburn and Wandsworth at opposite ends of the scale

-8.1

Darlington

+4.7

North-east

Lincolnshire

+16.4%

Blackburn

with Darwen

+14.8

Rutland

+5.3

Warwickshire

+8.7

Peterborough

+12.0

Monmouthshire

+12.1

North Somerset

-14.9%

Wandsworth

-8.7

Windsor and Maidenhead

Prices in the north-west were up 4.6% on average from January 2017 to January 2018, while London prices fell 2.6%

The pattern was repeated on a more local level with Blackburn and Wandsworth at opposite ends of the scale

-8.1

Darlington

-0.7

+4.7

North-east

Lincolnshire

+4.6%

+16.4%

Blackburn

with Darwen

+1.8

+14.8

Rutland

+2.5

+5.3

Warwickshire

+1.9

+1.5

+8.7

Peterborough

+3.0

+12.0

Monmouthshire

+12.1

North Somerset

-0.5

+4.1

-14.9%

Wandsworth

-2.6%

-8.7

Windsor and Maidenhead

Guardian graphic. Source: Source: LSL Property Services / Acadata

Unlike the property boom seen in London, the rise in house prices in Blackburn does not appear to stem from a lack of supply. The town has plenty of red-brick terraces, many of which are still empty, says Adrian McCormack, a Blackburn-based mortgage advisor with Countrywide.

Wolstenholme says the surge in prices is partly a result of developers building houses that people want to live in. There are currently about 12 new housing developments in the town, with 430 homes expected to be completed this year, 28% of which are classed affordable.

“I’ve done this job for 20 years and first time buyers used to start with a terraced house and now they’re wanting gardens and driveways,” she says.

One of those new developments is Green Hills, an estate of 167 homes designed by Wayne Hemingway, co-founder of the fashion label Red Or Dead. The houses are based on the design of traditional Lancashire farmsteads, and the project’s publicity material emphasises the high quality of the materials used and the communal green spaces on the site.

Hemingway says he wouldn’t have been able to persuade a developer to agree to the design of the estate in Blackburn six years ago. “Housing design in places like Cambridge, Oxford and Bristol have a flourish about them, which reflects the fact that people are feeling upbeat and confident,” he says. “When you go to towns that are struggling, the housing is completely identikit and dour. Blackburn is switching now.”

Phil Riley, senior deputy leader at Blackburn and Darwen council, says the success of developments like Green Hills demonstrates that, on balance, “there are quite a lot of people in Blackburn who are doing ok”. The town’s centre has been transformed over the past five years and Blackburn is on the up, he says.

Falling house prices in Putney

Mubasher Malik was told two years ago he could fetch £1.5m for the six-bedroom Victorian house in Putney, southwest London, where his family have lived for 30 years. Brexit is worrying some buyers, he says, or maybe the estate agent may have been too optimistic. Either way, he now expects to sell for up to £300,000 less.

“There’s a reality check everyone needs,” he says. “Falling prices do concern me. But I’m not trying to sell to cash-in and move away. It’s about how we can afford the next house.”

The IT consultant says his current place needs some work, but it’s still a catch; on a quiet tree-lined street less than five minutes’ walk to the train station connecting Putney with Waterloo. But he wants to downsize after his father died. “I have to compromise to sell – but the other sellers need to as well. Because no one is budging, it’s very difficult to move,” he says.

After almost a decade on the boil, the steam has come hissing out of the capital’s housing market since the EU referendum. This week’s Your Move figures showed house prices in this part of London, in the borough of Wandsworth, have fallen in value by nearly 15% in the past year.

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The developers of plush towers lining the banks of the Thames in Wandsworth, close to Battersea Power Station, have been particularly caught-out, according to John King, chairman of agents Andrew Scott Robertson in nearby Wimbledon. “The rest of the year is going to be tough, I don’t see a recovery until 20201,” he says.