The slow road to recovery

Countrywide plc

Wednesday, November 27, 2013

With London and the South East accounting for an increasing proportion of economic growth, house building, and mortgage lending, it’s unsurprising that house prices outside these two regions still remain below levels they recorded in 2008.

Analysis by Countrywide plc, the UK’s largest property services group, of Land Registry data reveals that of the 326 Local Authority districts in England, house prices have surpassed their 2008 peak in only a fifth (71). Taking into account inflation,which ran at 14% between 2008 and 2013, only in 11Local Authorities(all of which are in London) didprices rise in real terms.

In over half of Local Authorities (56%) house prices remain at least 5% below peak levels and there are few signs of this changing. The North-South house price divide has continued to widen with recent house price growth concentrated in thoseLondon and South Eastern Local Authorities where prices are already furthest above their previous peak.

In November 2013, average house price growth in the 74 Local Authorities where prices are at least 10% below 2008 levels, was just 0.1%. Conversely in the 17 (predominantly London) Local Authorities where house prices stand10% or more above their previous peak, prices increased by 1.2%, equivalent to a 14% increase over the year.

There is substantial regional variation in the performance of housing markets. Across London, the South East and East of England house prices have surpassed their 2008 peak in48% of Local Authorities. Outside of these regions house price growth has been strongest in more affluent areas, however it is only in Richmondshire, Warwick, Cheshire West, Isles of Scilly and Cheltenham wherehouse prices have exceeded 2008 levels. Even in many of the more affluent districts such as York, Bristol and Gloucester house prices remain below 2008 levels. House prices across much of the country remain considerably more affordable than in 2008, standing on average at 95% of peak levels. At current rates it will take in excess of 5 years for prices to return to 2008 levels in the hardest hit local authorities of urban northern England.

While house prices across England remain well below 2008 levels, the story in London couldn’t be more different. In all but three London Boroughs priceshave passed their 2008 peak. Data from the Land Registry shows that average London house prices are9.3% above 2008 levels, although in Westminster they stand 40% or £200,000 higher. Rapidly gentrifying Hackney has seen the largest increases outside Central London, with average house prices £67,000 higher, or 24% above their peak in 2008.However, affordable pockets still remain. In the three eastern Boroughs of Newham, Barking & Dagenham and Havering, prices remainbelow 2008 levels. While this gap has started to narrow as prices rise, house price growth in these three Boroughs remains the slowest in London.

Commenting on the findings Grenville Turner, Group CEO said:

“While house price rises in London have attracted considerable attention, in many places outside the Capital little has changed since 2010, and house prices remain well below their 2008 peak.To talk of a house price bubble would be to ignore the four fifths of local authorities where prices remain below 2008 levels and in some cases are still falling. There are only 5 (3%) Local Authorities across the whole of the North East, Yorkshire & the Humber, North West, East Midlands, West Midlands and South West where house prices have surpassed 2008 levels.

“With the largest increases in house prices over 2013 confined to London and its commuter belts, the gap between the South East of England and the rest of the country continues to widen. Increases in house price across London are running at around 7 times those outside the Capital. Within London itself there are now 15 Boroughs where house prices stand at least 10% above their 2008 peak. While Central London has performed strongly since 2008, there is clear evidence that house price growth is spilling out into some of the outer Boroughs as buyers look for better value further out.”

Map shows house prices in November 2013 as a proportion of peak 2008 price

Map - House Prices In November 2013 As A Proportion Of Peak In 2008


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