North-South house price divide 'will turn on its head over next five years'
The North-South house price divide will turn on its head over the next five years, a report predicts - with property values rising at a faster rate in northern England, Wales and Scotland than those across London.
Across Britain, house prices are expected to increase by 14.8% from 2019 to 2023, according to forecasts from real estate adviser Savills.
In cash terms, this increase could potentially add around Â£32,000 to the average house price by the end of 2023 - making it Â£248,086.
But there will be significant regional variations, the report predicts - with only single-digit house price growth expected across London over the five-year period while many other areas see double-digit increases.
Savills said stricter mortgage lending rules introduced following the financial crisis will limit house price increases - but the toughened rules which make sure mortgages are affordable for borrowers will also help to protect the housing market from prices nosediving.
Between 2019 and 2023, house prices are expected to increase by 21.6% in the North West of England, by 17.6% in the North East of England and by 20.5% in Yorkshire and Humberside.
In Wales, house prices are predicted to increase by 19.3% while Scotland is expected to see 18.2% price growth.
London has been seen as the engine of the housing market recovery but Savills said house prices there have already increased by 72% over the past 10 years - well ahead of any other region.
This leaves less wriggle room for house prices there to keep pushing upwards as people stretch their mortgage borrowing.
Savills expects to see house prices across London increase by 4.5% between 2019 and 2023.
However, the prime housing markets in London made up of the most expensive properties are less dependent on people needing to raise a mortgage and they will outperform mainstream house prices in the capital over the next five years, Savills predicts.
It expects to see 12.4% price growth in prime central London by the end of 2023.
Lucian Cook, Savills head of residential research, said: "Brexit angst is a major factor for market sentiment right now, particularly in London, 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.
"That legacy will limit house price growth, but it should also protect the market from a correction."
The report said that, outside London, key regional economies including Manchester and Birmingham which attract both local buyers and investors have the capacity to outperform their surrounding regions.
It expects house prices in Wales to perform broadly in line with the Midlands as it has done previously - but said Wales is a "hugely diverse" market and there may be increased demand there coming from the Bristol direction following the abolition of Severn crossings charges.
Meanwhile in Scotland, Edinburgh and Glasgow are performing particularly strongly, the report said.
Here are Savills' forecasts for house price growth between 2019 and 2023. Based on figures from Nationwide Building Society's house price index, Savills has also calculated what the average house price could be by the end of 2023 if its projections for house price growth are correct:
- North East, 17.6%, Â£147,100
- Yorkshire and Humberside, 20.5%, Â£193,117
- North West, 21.6%, Â£197,717
- East Midlands, 19.3%, Â£222,392
- West Midlands, 19.3%, Â£227,394
- South East, 9.3% (within the South East, house prices in the outer South East which includes Brighton and Hove, Milton Keynes and Aylesbury could reach Â£305,885; and those in the Outer Metropolitan area which includes Reading, Slough, St Albans, Windsor and Maidenhead could reach Â£398,190)
- East Anglia, 9.3%, Â£249,958
- London, 4.5%, Â£489,628
- South West, 12.6%, Â£276,359
- Wales, 19.3%, Â£184,773
- Scotland, 18.2%, Â£176,308