The difference in house prices between the North and the South has always been huge, with the South having drastically higher prices in comparison. But in the past year Northern house prices have seen a huge increase, so much so it’s outpaced the South.
What do we know about the price growth? And what has caused this change in the North that we’re not seeing in the South?
What does the data show?
Yearly, to January 2021, there has been a price rise in the North of 9.8%, far outpacing the 6.6% growth in the Midlands and 6.4% growth in the South. The North West has seen the biggest price inflation of 12%, with the average property priced at £184,234, with Yorkshire and Humber (growth of 8.9% and average house price of £179,248) and the North East (growth of 8.5% and average house price of £138,151) not far behind.
There also seemed to be an East West divide starting to develop, with the East Midlands outperforming every area in the South in terms of price growth, and the West Midlands showing the lowest growth in the country at 4.7%.
London recorded the second lowest growth in the UK at 5.3%.
Having said this, despite the price growth in the North, analysis from Ascend Properties found property prices still average about half of the typical price in the South, with the average £167,211 in the North and £357,257 in the South.
Alongside the house price growth, the rental yields are also stronger in the North, with an average of 5.2% compared to 4.1% in the Midlands and 3.8% in the South. The UK’s best rental yields are in Yorkshire and Humber at 6%.
Why could this be?
As we preivously reported, since the initial lockdown in March 2020, the UK has seen an increase in rental prices in 10 out of the 12 regions, with London being one of the only regions to see a decrease, with rental prices down 3.9% between January 2020 and January 2021.
This is seen to be due to people’s changing priorities, with more people starting to prioritise their homes, with the amount of time spent in them increasing. A lot of workers have now seen they’re able to work from home and so don’t need to live within a certain radius of big cities.
Because of this, people are escaping the city and looking for areas with more open green spaces, allowing us to have more space both in our homes and around our homes.
These changes to priority can explain both the growth in house prices and rental yields, as areas in the North have lots of open spaces, leading to demand in these areas increasing, with supply remaining the same.
As the data shows, when demand increases and supply doesn’t, the price increases.
One thing the past year has taught us is we’re unable to predict what’s around the corner. However, looking at the trends, we would be inclined to assume the Northern house prices will continue to grow at a faster rate than those in the South.
The big question is – will this growth lead to the end of the ‘North South divide’? Or will the South always have an extra premium, despite the change in people’s priorities?