Times: UK house price gap continues to widen
Muggle
December 26, 2009
UK house price gap continues to widen
Judith Heywood, Deputy Property Editor
As 2009 comes to a surprisingly upbeat close, some homeowners are
struggling to feel the joy. House price surveys might universally be
showing recovery in the property market, but a new report hints at
what many observers have suspected to be true: the gains are being
felt only for some types of homes in some areas.
A survey of homes for sale this year by FindAProperty.com, the search
website, shows how the rate of house price growth is as high as 7.1
per cent in London, while average prices are 12.2 per cent down in
Scotland.
Nigel Lewis, of FindAProperty, said: "This year's ups and downs mask
considerable variations between the winners and losers. Different
regions, cities and different types of property performed extremely
variably."
The survey of the asking prices of homes advertised on the website
show that, rather than penetrating the regions, the recovery has been
restricted to London and its commuter hinterland in the South East.
These two regions are the only ones showing house price inflation year
on year, on average.
GRAPHIC: Asking prices
http://business.timesonline.co.uk/multimedia/archive/00664/GRAPHIC__Asking_pri_664086a.pdf
The North West and the East and West Midlands, in particular, are
trailing.
Within the regions, the website's lists of winners and losers of 2009
show that Brighton and Southampton were the stars, with properties
there increasing by 5.9 per cent and 4 per cent, respectively.
Northern cities trailed, with both Newcastle and Manchester suffering
double-digit declines in asking prices. Sheffield and Merseyside were
not far behind.
In London, the average house (at £434,923) is on the market at £28,675
more than it would have been a year ago, but the capital has not
escaped unscathed. The effect of troubles in the City can be seen in
the performance of the boroughs: Greenwich, a sought-after area in
South East London within easy reach of Canary Wharf and popular with
younger professionals and families employed there, has suffered this
year, dropping 8.7 per cent.
Mr Lewis said: "The oversupply of new-build property around the Cutty
Sark and Woolwich Arsenal has partly been to blame for the dip in
prices." The nearby areas of Lewisham and Tower Hamlets, also well-
supplied with recently built apartment blocks marketed at first-time
buyers, have also underperformed.
The star area in London was Westminster, an established location that
only recently has been accepted as a prime Central London residential
area. Average values were up 18.2 per cent there — yet in Islington,
which similarly has moved up the social scale and is centrally located
and popular with affluent City workers, barely appreciated, with price
rises of only 0.8 per cent.
The boroughs of Harrow and Merton, rich in family homes and good
schools, outperformed, beating even Kensington and Chelsea, which has
benefited from an influx of foreign money. Hounslow and Barnet have
risen up the ranks as buyers opt for family-friendly areas that are
priced within reach.
For those going to market this year, the ideal home to put up for sale
was a five-bedroom house. According to FindaProperty, these homes rose
in value by 5.6 per cent over the year and now cost on average
£541,095. Two-bed homes, popular with first-time buyers but perceived
as too small for families, are 2.9 per cent down. Three-bedroom or
larger flats — a rare commodity, especially in new developments — were
the only kind of apartment to increase in value, rising by 2.1 per
cent. One-bedroom flats, which have suffered from the inability of
aspiring first-time buyers to secure mortgages and less demand for
city pied-à-terres, fell by 5.5 per cent.
Mr Lewis said that smaller units appealed to less affluent buyers, who
were unable to move because mortgages were not freely available, while
the value of larger houses and flats has been pushed up by those less
reliant on borrowing. He said: "A lot of recent housebuilding has
focused on flats, not houses, and this has added a premium to larger
family home."
FindAProperty says that the property slump, widely forecast for 2009,
did occur, but was restricted to the first three months of this year.
The market improved substantially from April, the report suggests.
Most agents are predicting a buoyant start to 2010 before the general
election and economic ailments push prices back into reverse. Yet
FindAProperty says it believes that the market has turned already,
with the first fall in asking prices in eight months recorded in
November.
Mr Lewis predicts that there will be a "second dip" in January and
February. He said: "Indications are that the mini-recovery is running
out of steam. House prices at all levels are down and further declines
are to be expected over the quieter end-of-the-year period."
Several agents, among them Savills and Knight Frank, predict that the
slow economic recovery will cause house prices to fall again, but not
to the lows seen early in 2009. Prime homes in London and the country
are tipped to outperform, as demand is bolstered by City and foreign
cash, but the outlook for more modest homes will be stung by growing
unemployment, higher taxes, the prospect of rising interest rates and
uncertainty surrounding the election.
However, as agents and economists put the finishing touches to their
forecasts for 2010, Mr Lewis warned: "There's not one UK housing
market but a series of micromarkets."
http://business.timesonline.co.uk/tol/business/economics/article6967840.ece