Despite Brexit, homebuyers, including buy-to-let investors, in the north of England are showing much more confidence than those in the south.
Since June 2016, a total of 10 UK cities have achieved double-digit house-price growth, of which a grand total of seven are in the north of England and only one in the south (with the other two being in Scotland and Wales respectively).
Birmingham, Leicester and Manchester lead the way
Birmingham, Leicester and Manchester have shown the greatest price increases, of 16%, 15% and 15% respectively, with Nottingham following close behind on 14%, Leeds grew by 12% and both Liverpool and Sheffield grew by 11%.
Even Newcastle grew by 5%, which might not seem that impressive compared to its neighbours, but puts it well ahead of London, Oxford and Cambridge, the first two of which grew by 1% and 2% respectively while the last fell by 4%.
It’s also worth noting that Newcastle has been rather overshadowed by its neighbours and so its new growth could be an exciting sign that it is finally starting to fulfil its potential. While the other southern cities measured all showed growth, only Bristol reached double-digit growth and even then only just (10%).
The housing market reflects local economics
While some might be concerned that the robust growth in the north is a sign of an inflating bubble, the fact is that it is underpinned by very solid foundations, namely the economic transformation of the north helped, in no small part, by the Northern Powerhouse initiative.
This has led to increased wages in this area, which, of course, helps to keep housing affordable, even though prices are rising. It should also be noted that the economy in the north of England is much less reliant on the financial-services sector than the economy in the south and hence is less concerned about the issue of equivalence versus passporting.
To this might be added the fact that these impressive price increases come off a very low base which is why housing in the north is still more affordable than housing in the south (on a like-for-like basis). In the south, by contrast, nervousness over Brexit and pressure on affordability make for a stagnant market.
The outlook ahead
It’s probably fair to say that the outlook for the north is very much “more of the same” at least for the foreseeable future. Even though there north is far from unified in its support for Brexit, the fact remains that its move into knowledge-based industries has come in a very timely manner and it also benefits from global links through both immigration and the international popularity of its many excellent universities.
For the south, of course, Brexit is the big elephant in the room, but perhaps the issue is not so much the fact of Brexit as the fear of it and the fact that people do not know what form it is going to take and therefore do not know what to do about it. Hopefully, getting clarity around the practicalities of Brexit will kick-start the general recovery process.
Mark Burns is the managing director of property investment firm Hopwood House.
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