You are in > manchester.com  > News > North-south house price divide widens

Finance

North-south house price divide widens

19/10/2007

The north-south house price divide is widening, as the property market in the bottom half of the country continues to boom.

During the third-quarter the average price of a house in the south reached £265,921, some 68 per cent higher than the average house price in the north of £158,636.

Mortgage lender Halifax, which released the figures, said the north-south divide had increased from a low of 56 per cent in the first quarter of 2006, ending almost four years of continuous narrowing caused by property prices in the north rising more rapidly.

However it reported that the average cost of a home in the north had increased by nearly double that in the south over the past five years, despite the gap between both parts of the country recently widening.

Homeowners in the north of the country saw the value of their property rise by an average of 97 per cent between the third quarters of 2002 and 2007, while in the south average prices rose by just 53 per cent over the same period.

Nonetheless properties in the south saw the highest price rises over the third-quarter of this year, with the biggest increases recorded in Greater London (2.3 per cent) and the south-east (1.8 per cent).

But Halifax warned that the gains recorded in the regions were lower than in previous quarters, suggesting that the housing market was slowing in the areas.

Over the year to the end of September five regions, including three of the four areas in the south, recorded double digit growth in house prices. Northern Ireland led the gains, with property prices there up by 29.1 per cent during the 12-month period. Eight out of the ten towns that saw the largest house prices rises over the year are also located in the region, Halifax revealed.

House prices in Greater London climbed by 18.6 per cent over the year, while those in Scotland grew by 14.2 per cent. In the south-east average property prices increased by 13.7 per cent over the year, while in East Anglia house prices climbed by 11.1 per cent.

In contrast single digit growth was recorded across the rest of the country, with the smallest gains recorded in the west midlands (4.7 per cent) and the north-west (5.2 per cent).

Commenting on the figures, Halifax chief economist Martin Ellis predicted further hikes in house prices.

"Sound market fundamentals, including high levels of employment and a shortage in the number of properties available for sale will continue to support house prices," he explained.

However other recent surveys have pointed to a slowdown in house prices, while the International Monetary Fund (IMF) warned this week that the UK and other European countries could see a sharp correction of property prices as a result of the ongoing credit crunch that has hit the US housing market.