Fears the North East may miss out on housing market boom

The region suffered a 1.6% annual drop in house prices with property in the North East now worth a quarter of that in London

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A typical house in the North East is now worth less than a quarter of one in London, official figures have revealed.

The region is the only area in the entire UK to suffer a year-on-year price drop, with a typical house price in the North East now standing at £96,227.

Land Registry statistics show the region is struggling to keep pace with the UK’s housing market boom, which has seen property prices in London surge by 10% year-on-year.

But in the North East the cost of a property fell by 1.6% annually in November, highlighting the patchy state of the market.

Across England and Wales, house prices rose by 3.2% year-on-year to reach £165,411 on average. Prices rose by 0.1% month-on-month in November.

Prices in London rose by 10.6% annually to reach £396,646 on average as the housing market revival continued to show itself strongly in the English capital.

London also saw the biggest monthly price rise, with an increase of 1.8%.

London has had a particular pull for wealthy overseas investors looking for a safe haven to place their cash. There have also been signs of “gazumping” – which happens when a buyer thinks they have agreed a deal to buy a house only for someone else to step in and outbid them – being back on the increase in the capital.

The South East saw the second largest annual jump in house prices, with a 3.5% increase taking typical values to £216,618.

Meanwhile, Wales recorded a 3.3% annual increase in house prices, pushing them to £118,310 on average. The East saw the most significant monthly price fall, with a 0.7% drop taking average prices to £177,975.

The Land Registry’s latest figures also showed how house sales have been much stronger than in the same period last year.

The most up-to-date figures available show that during September 2013 the number of completed house sales in England and Wales increased by 24% to 65,378, compared with 52,870 in September 2012. The housing market has consistently shown a strong pick-up throughout 2013 following the introduction of Government schemes such as Help to Buy.

The scheme has handed mortgage borrowers with small deposits a helping hand to get on or move up the housing ladder.

The upturn in the housing market is said to have boosted consumer confidence, but there have also been fears that people are being encouraged to stretch themselves too far financially to meet rising prices.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “With funding more readily available than at any time in the past five years, many buyers are finally able to realise their property-ownership dream.

“This surge in demand is pushing up prices, particularly in London, where supply is already limited. Gazumping and sealed bids are becoming commonplace as relatively ordinary properties fetch a premium.

“Many buyers are worried that if they don’t take the plunge now, they will be priced out further.”

Mr Harris said that locking into a fixed-rate mortgage deal could help give “peace of mind” to some people who are worried about the prospect of interest rates rising.

He said: “There are still plenty of rock-bottom mortgage deals available, with some particularly good pricing on five-year fixed rates.”

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