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North/South house price gap widens

North/South house price gap widens

Category: Mortgages

Updated: 01/04/2016
First Published: 01/04/2016

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Average house prices have been rising at a rapid pace in recent years, but sometimes, the national outlook can be misleading. Indeed, average prices can vary wildly between different regions, as can price movements, with new research from Nationwide highlighting the extent of variations across the country.

New house price high…

The figures show that the average UK house price rose by 5.7% in the 12 months to March, with this annual price growth not only being a clear acceleration from the rate of 4.8% recorded in February, but also the strongest annual growth rate seen since February 2015. Price growth also accelerated on a monthly basis, rising by 0.8% from February (up from the rate of 0.4% recorded the previous month), bringing the price of a typical home in the UK to a new high of £200,251.

Much of this has been driven by the pickup in housing market activity in recent months, said Robert Gardner of Nationwide, with this in itself being fuelled by the rush to complete second home sales before the stamp duty hike came into force today (1 April). "This temporary boost to demand against a backdrop of continued constrained supply is likely to have exerted upward pressure on prices and helped to lift the pace of annual price growth out of the fairly narrow range of 3%-5% that has been prevailing since the summer," he explained.

It's largely expected that the pace of house price growth could begin to moderate now that the stamp duty changes have come into effect, but this isn't the only factor: it's possible that the "recent pattern of strong employment growth, rising real earnings, low borrowing costs and constrained supply will keep the demand/supply balance tilted in favour of sellers and maintain pressure on price growth" in the months to come, added Robert, so we may not see the end of price growth for some time.

… but all may not be as it seems

Despite such robust figures on a national scale, regional disparities continue to grow, maintaining the same trend of recent years. The figures show that southern regions continue to record "significantly stronger rates" of annual house price growth, further widening regional disparities, with the rate of price growth moderating as you move further north.

In fact, the quarterly figures show that prices in Scotland and the North actually fell on an annual basis, down 0.2% and 1.1% respectively, while prices in London and the South East continue to dominate. This means that typical house prices in London now vastly outweigh those in more northern regions: an average home in the capital now stands at £455,984, while at the other end of the scale, a typical property in Northern Ireland costs just £123,225 – the lowest of all regions surveyed – and one in the North of England will set you back only slightly more at £123,864.

In fact, looking at the North/South as a whole, the gap in average prices between the South and the North of England now stands at nearly £163,000: prices in the North are now less than half those in the South, marking a record low.

Ensure affordability whatever your region

Essentially, this means that some places are going to be far more expensive to live in than others, and while we're not suggesting that you move to another part of the country to chase down house prices that may be more affordable, we are suggesting that you make whatever area you live in as cost-effective as possible.

One of the best ways to achieve that – aside from building up as much of a deposit as you can – is to find the right mortgage deal. A competitive mortgage can ensure that your repayments remain affordable no matter where you live, so check out our mortgage best buys and see if you can find the mortgage that suits you.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.