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Residential property values increasingly disparate between North and South in UK

Residential Property Disparity Between The North and South

UK property values posted a monthly price rise for the first time in 20 months in March on the back of increased demand, activity and a scarcity of residential properties for sale.

However, UK Property Prices overall were up in the South and down in the North

According to fresh data released by Hometrack, UK residential property prices are still rising in the South, but property values have seen widespread falls throughout the East Midlands, Wales and the North.

During March 2012, residential property values did dip a little in a few parts of London, the South-West and East Anglia. However, in Yorkshire and Humber, about half the region saw property prices fall. Property values were also down in the East Midlands, North West and Wales,

With such widespread variations, the Hometrack survey shows that nationally residential property prices as a whole are barely moving, up just 0.2% from February 2012.

There was only a 4.4% increase in new buyers registering with agents, compared to 18% in February.

The length of time taken to sell a residential property also varies widely across the country, from 11.6 weeks in the Midlands and North to under six weeks in London.

Hometrack’s Director of Research, Richard Donnell, said: “The housing market is not firing on all cylinders nationally. The divergence in the relative strength in northern and southern England is set to remain. We expect prices to track sideways in the short term, with the outlook for the second half of the year hinging on households’ expectations for the economy and their incomes.”

The Hometrack report does not give residential property prices, but said that in London property prices rose 0.5% in March, the highest monthly increase since April 2010.

However, the increase in London property prices were recorded pre-Budget, when Stamp Duty on properties valued at £2 Million (GBP) plus increased from 5% to 7%, for private purchasers, and 15%for properties bought by partnerships, collective investment funds and companies.

The survey results reveal a clear divide in the strength of the UK property market between southern England and the rest of the country.

Hometrack reckon that all the evidence points to a continued firming up in UK property prices over the next few months as demand for residential property increases and the supply of available properties remains subdued.

New property instructions coming to market have seen vendors raise the average asking price by 4.1%

The average property asking price for new instructions put on the market within the last 4 weeks is now £233,252.

The almost £11,000 increase is up from January’s average asking price of £224,060, despite a warning that much of the residential property stock already on the market in some parts of the UK, is “over-priced and unsaleable”.

Rightmove have described the highest monthly increase since April 2002, the biggest rise in UK property asking prices for nearly ten years as “a surprisingly strong uplift given the challenging economic environment”.

But it said that the rise is partly fuelled by cash-rich sectors of the market, where buyer demand is exceeding suitable property supply.

Director Miles Shipside warned property vendors: “There is pricing power if you are selling the right type of property in the right place, where enough potential buyers have access to funding. But if your local market does not have those characteristics and your price-pump is based on little more than seasonal optimism and an estate agent’s hot air, then be prepared for buyer response to be a let-down.”

He added: “In some micro-markets, sellers have the upper hand, but on the whole, a buyer with cash or a mortgage offer is the one in the driving seat.”

After depressed activity in the UK property market over the last four years, some households have decided they had to get on and move. This means that here could be a growing acceptance by the British public that the state of today’s housing market is the new norm.

Mr Shipside said: “Search activity on Rightmove is up by 19% on January 2011 and it could be a sign that some of those who can afford to move have decided to get on with their lives, driven either by desperation or by coming to terms with the constant barrage of negative economic news being the new norm. You can get tired of gloomy news or get used to it, and indeed for some cash-rich buyers, life has moved on to such an extent that it’s like the Lehman Brothers collapse never happened. Stock levels are still on the high side in some less active parts of the country, but much of that stock is perhaps over-priced and unsaleable. However, in some micro-markets, the shortage of existing and new instructions has helped contribute to the largest monthly jump in new selling asking prices for nearly a decade. While the mass-market stays at home, those that have access to funding continue to be active and have spending power, resulting in this month’s big price hike.”

Average weekly listings on Rightmove are currently 30% below 2007 (pre-credit crunch levels), with a weekly run rate of 24,406 new listings.

Rightmove’s current asking price of £233,252 appears to be £70,000 ahead of current actual property selling prices, when compared with the selling prices currently being reported by Halifax and Nationwide of £160,907 and £162,228 respectively.

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