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| House price divide between north and south to widen, says thinktank | House price divide between north and south to widen, says thinktank |
| (2 days later) | |
| The UK will suffer a sharp widening in the north-south house price divide this year as increases in the value of London properties continue to outpace the rest of the country. | The UK will suffer a sharp widening in the north-south house price divide this year as increases in the value of London properties continue to outpace the rest of the country. |
| According to the forecast by the Centre for Economics and Business Research (CEBR), house prices in the capital will rise by 2.4% this year, as those in the north-east drop by 2.7%. The trend will continue into next year, the thinktank added, when London prices will rise by 2.3% as those in the north-east fall by 1.3%. | According to the forecast by the Centre for Economics and Business Research (CEBR), house prices in the capital will rise by 2.4% this year, as those in the north-east drop by 2.7%. The trend will continue into next year, the thinktank added, when London prices will rise by 2.3% as those in the north-east fall by 1.3%. |
| Douglas McWilliams, chief executive of CEBR, said: "Demand in the London market remains resilient, with the ongoing eurozone drama piquing international interest in the capital. Furthermore, we can expect an abundance of affluent French citizens to be shopping for homes in London if President Hollande's proposed 75% rate of income tax is enacted." | Douglas McWilliams, chief executive of CEBR, said: "Demand in the London market remains resilient, with the ongoing eurozone drama piquing international interest in the capital. Furthermore, we can expect an abundance of affluent French citizens to be shopping for homes in London if President Hollande's proposed 75% rate of income tax is enacted." |
| He added that the south-east, the east, as well as the east and west Midlands would all enjoy gains of at least 1% this year, with every other region suffering falls. Scotland and the north-east will be the only two regions hit by house price declines of more than 2%, McWilliams said. | He added that the south-east, the east, as well as the east and west Midlands would all enjoy gains of at least 1% this year, with every other region suffering falls. Scotland and the north-east will be the only two regions hit by house price declines of more than 2%, McWilliams said. |
| The bullish assessment of the London property market comes despite the increasingly desperate situation in the eurozone, which other watchers have highlighted as a potential trigger for a London slump. Last week a report by City consultancy Fathom said that "safe haven flows" from European buyers had been the most important driver of the rise in prime London property prices since the mid-1990s – first in 1997-99, when the euro was founded and investors were uncertain whether it would succeed; and then since 2010, with the euro sovereign debt crisis. | The bullish assessment of the London property market comes despite the increasingly desperate situation in the eurozone, which other watchers have highlighted as a potential trigger for a London slump. Last week a report by City consultancy Fathom said that "safe haven flows" from European buyers had been the most important driver of the rise in prime London property prices since the mid-1990s – first in 1997-99, when the euro was founded and investors were uncertain whether it would succeed; and then since 2010, with the euro sovereign debt crisis. |
| However, Fathom added that house prices in London's most exclusive districts would slump by up to 50% over the next five years if the eurozone collapses. | However, Fathom added that house prices in London's most exclusive districts would slump by up to 50% over the next five years if the eurozone collapses. |
| CEBR said it had not priced in a sudden collapse of the eurozone because there are so many unknowns. Its analysis also comes despite it being a vocal sceptic on the future of the single-currency zone and its own data showing a recent slump in City jobs, changes that are tightly correlated to London house prices. Shehan Mohamed, CEBR's housing economist, admitted: "Not even London would be insulated from [a collapse in the eurozone]." But he predicts that rent rises are also likely to support house prices. "Purchasing a property is incentivised as rents become dearer, while the buy-to-let market is stimulated as rental yields increase." | CEBR said it had not priced in a sudden collapse of the eurozone because there are so many unknowns. Its analysis also comes despite it being a vocal sceptic on the future of the single-currency zone and its own data showing a recent slump in City jobs, changes that are tightly correlated to London house prices. Shehan Mohamed, CEBR's housing economist, admitted: "Not even London would be insulated from [a collapse in the eurozone]." But he predicts that rent rises are also likely to support house prices. "Purchasing a property is incentivised as rents become dearer, while the buy-to-let market is stimulated as rental yields increase." |
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