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The North-South property price divide is expected to shrink over the next five years according to new research.
Estate agents Savills are predicting an average property price rise of 14.8 per cent in England and Wales over the next five years, but they expect big variations across the country.
The North-South property price divide will become smaller as property values in the North West grow at the highest rate of 21.6 per cent, while values in the South East are expected to rise by 9.3 per cent, and London by just 4.5 per cent.
Savills has scaled back its predictions for London amid changing conditions in the housing market – with growth in the North and Midlands reversing some of the North-South property divide.
Savills believe that rather than Brexit it is more an affordability issue that is limiting the growth in house prices in the long term.
Savills head of residential research, Lucian Cook, explained: ‘Brexit angst is a major factor for market sentiment right now, particularly in London. But it’s the legacy of the global financial crisis – mortgage regulation in particular – combined with gradually rising interest rates that will really shape the market over the longer term.’
He continued: ‘That legacy will limit house price growth, but it should also protect the market from a correction.’
Savills also predicted however that the top end of the market in London would increase by significantly more, due to it being less dependent on mortgage borrowing.
Areas outside London and the South are expected to see stronger growth as prices are more affordable, leading to shrinkage of the North-South divide.
However, the opposite is expected for growth in rents over the next five years, with Savills predicting rental growth of 13.7 per cent countrywide, but slightly higher in London at 15.9 per cent.
That would result in typical rents for a two-bedroom property rising from their current level of £793 to £902 by 2023. In London, the rise would be from £1,572 to £1,822.