Regional Variations in Property Prices Since 2008

Regional Variations in Property Prices Since 2008

Savills, who are always great for data analyses, have used some data from the Land Registry and the Registers of Scotland to look at how house prices have moved in the ten years since the credit crunch in 2008.

London has seen a near 80 per cent rise in house prices but prices in the north east of England are still nine per cent below what they were in 2007. Drill down further and you can see that some specific boroughs in London have done even better – in Hackney they have gone up by more than 120 per cent. Other areas to see very strong rises in London are Southwark and Lewisham.

But has London reached the limits of affordability?

Interest rates may be at historic lows – at 2.07 per cent for new lending against the 5.52 per cent in 2007, according to the Bank of England – but mortgage regulations bought in from 2014 for the Mortgage Market Review and the tightening of restrictions recently, for buy to let landlords have made it harder for folks to get financing.

Price rises in the capital are slowing and in some boroughs have gone into a reverse, while regions outside London appear to be picking up speed.

Recent House Price Moves

In the latest data, London house prices were going up at just 2.9 per cent, well below the 25 per cent seen in 2014, while the East Midlands, North West and South West of England are rising at 7.1, 5.5 and 5.3 per cent respectively. However, transactions are very low still compared to the levels before the credit crisis.

Currently, political uncertainties round Brexit are weighing on house prices. Plus mortgages are hard to come by too and wages have been rising slower than inflation for a few years now. Add to that the concerns about any possible future rise in interest rates, and you can see why the market is now a bit stagnant.

Many landlords are looking to better yields in the north of England, but of course, they should always factor in the potential for capital growth too.

Capital growth depends on many factors – and we advise many of our clients about what things to look for when assessing if capital growth is likely to come and how to spot these factors in a given area of interest.

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