The latest Asking Price Index report from Home.co.uk highlights the bi-polar nature of the current UK housing market. Scottish house prices continue to soar unabated with a massive 18.4% gain over the last 12 months, whilst the English housing market continues to flounder. The report also highlights a recent strengthening of the London market and thereby offers hope of a Capital-led recovery.
North of the border confidence in bricks and mortar is as strong as ever. Untainted by John Bull's house price turmoil, Scotland's housing stock is rapidly growing in value month on month. So why are the Scots enjoying a sustained rally when the English market ran out of steam 2 years ago? The answer, as with many economic questions, may lay in several factors explains Doug Shephard, Business Development Director at Home.co.uk. "Firstly, Scottish property has been undervalued for a long time and has been 'playing catch-up'. Secondly, the process of Devolution has injected considerable funds into the Capital further inflating prices and thirdly, the different selling process in Scotland must not be overlooked, as this makes discounting of property whilst on the market uncommon." Such huge price rises raise serious concerns as to the sustainability of such growth and the likelihood that Scotland is generating its own house price bubble.
Meanwhile, according to Home.co.uk, since February prices fell in England in ALL 8 regions, the largest falls being registered in the Home Counties (-2.2%) and in the North West (-2.1%). This latest data shows that, despite the favourable season, the English housing market is still struggling to find its feet two years after the 2004 'melt-down'. Moreover, reports of rising repossessions (largest number of 'actions entered' since the early 1990s) and the possibility of interest rate hikes serve to underline the current critical state of the property market in England (and Wales). Such uncertainty in a traditionally confident market may be driving more and more investors to better performing sectors such as Gold and the Stock Market.
On the brighter side, the Home.co.uk Index report offers a glimmer of hope for the beleaguered English homeowners in the possibility of a London-led revival. Somewhat ironically the bright future forecast for the City of London can only serve to breath new life into the Capital's property market. The financial markets sector is both enjoying good performance and an influx of US executives keen to evade the new restrictive regulations like the new Sarbanes-Oxley financial disclosure rules. The knock-on effect from a booming City is certain to buoy prospects for top-end sales and lettings. Home.co.uk figures reveal the extent of the rather erratic 'mini-boom' in house prices observed in London thus far and draws attention to the proven ability, of this leading housing market, to influence the Southern regional markets.
Whilst the present state of the property market raises fears for many of a return to the 'bad old days' of negative equity, it may present a long awaited opportunity for many to get on the first rung of the housing ladder. "The upside of the observed slide in asking prices in England and Wales is that given a 'soft landing' and moderate interest rates, first-time buyers will at last get a genuine chance to get into the market. For many, the dream of owning their own home has been a forlorn hope, as they found they were unable to compete with buy-to-let investors," comments Doug Shephard. "Such an increase of first-time buyers would be good for the market as a whole."
"These potential homeowners are the life blood of the housing market." Stephen Leonard, Director of Mortgages at Alliance & Leicester
Notes for EditorsOver the last 22 years, Home.co.uk has become established as a dynamic, innovative and ethical service. By providing the UK's most comprehensive Property Search and Estate Agents directory coupled with detailed House Price analysis, Home.co.uk delivers the real power of the Internet to inform and empower estate agents, homebuyers, renters, landlords and sellers in across the UK.
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