House Prices Rise but Regional Gap Widens
Recent figures indicate that UK house prices are continuing to rise. Nationwide’s house price index showed that UK prices rose by 0.5% in September. That meant that the annual rate of price growth increased to 3.8%.
The Building Society’s chief economist was encouraged by the modest pick up in house price growth, noting that prices rises were stabilising and somewhat nearer to the pace of earnings growth.
However, there are many that continue to point to the imbalance between the supply of property and the strong demand from buyers. With fewer properties on the market and plenty of interest from buyers it would not come as a surprise for there to be a continued pick up in house price growth.
The UK wide price increase masks a wide range of regional growth rates. London in particular continues to see price increases far and away higher than elsewhere in the country. In fact, Nationwide figures show that the price of a typical home in the capital is now more than twice the UK average.
Far from the rocketing prices of London some areas have shown a slowdown in the annual rate of growth. To underline how different the growth rate can be depending on location a couple of areas saw a small decline in prices.
The regional variation in prices has led to the divide between prices in the North and South of England reaching a record high. The third quarter of this year saw prices in the South of England up 8% year on year whilst those in Northern England increased by just 1%. Putting that into cash terms means that the gap between average prices in the South and North of England has exceeded £150,000 for the first time.
However, most areas continued to see gains in the third quarter and with the risk that construction activity could lag behind strengthening demand there could continue to be upward pressure on house prices.
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