Northern House Prices Predicted To Soar
After years of price rises fuelling the southern property market, the introduction of new lending rules combined with more attractive northern propositions are due to turn the North-South divide upside down, according to Savills.
In a shocking new forecast released by real estate advisor Savills, homes in the north are expected to see their values soar by over 20% within the next five years, while comparative homes in and around the capital could be left trailing in single digits.
There is no single explanation for the geographical shift, but rather a culmination of various factors that have contributed to fears that the south may no longer be a sound investment for businesses as the country presses on through an economy that is at best, fragile, and at worst, teetering on the edge of disaster.
Analysts at Savills believe that the stricter lending rules surrounding mortgages which came into force after the 2008 financial crisis will limit the house price growth potential of regions such as London where housing values have soared over the last 30 years. They also believe that the Bank of England’s decision to continue raising interest rates will hamper the ability of vendors in the capital to sell their home fast.
There are, however, more global issues facing the property industry as the UK edges ever closer to the Brexit deadine in March 2019 as it remains unclear whether the Chequers deal, no-deal, or even the withdrawal of Article 50 entirely will come to pass, forcing numerous companies to enact contingency plans that could ultimately reduce London’s influence in the world of finance.
Companies such as Panasonic, Unilever, Moneygram and Easyjet have already stated their intention to move their headquarters from London to the EU mainland once Brexit is finalised, and over 20 banks have confirmed their move to Frankfurt to ensure strong profits.
Remarkably, this mass exodus is also occurring on a national scale as well, with companies such as the BBC and Channel 4 moving their headquarters to Manchester and Leeds respectively to avoid the high operating costs associated with the capital.
It is, perhaps, little surprise then that sold house prices in and around London are expected to increase by only 4.5% over the next five years – 12.6% for the South West as a whole – while the North West is expected a to enjoy a 21.6% increase in the same period, with Yorkshire and Humberside expecting a rise of 20.5%.
“Brexit angst is a major factor for market sentiment right now, particularly in London,” said Lucian Cook, Savills head of residential research.
“But it’s the legacy of the global financial crisis – mortgage regulation in particular – combined with gradually rising interest rates that will really shape the market over the longer term [and] that legacy will limit house price growth, but it should also protect the market from a correction.”
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