London house prices: gap between capital and the North narrows as mini-boom sweeps the country

·3-min read
 (Daniel Lynch)
(Daniel Lynch)

The gap between asking prices in London and the north of England has shrunk to its smallest in eight years, as the Covid-triggered property market “mini boom” sweeps the top half of the country.

The average price tag of a home in England has hit new heights this month, according to Rightmove’s May house price index, rising £5,767 (1.8 per cent) to £333,564.

This has been driven by an 11.1 per cent increase in the north west and a 10.5 per cent rise in Yorkshire and the Humber.

A lack of supply and a swell in demand to upsize following the multiple lockdowns experienced in that part of the country has pushed up asking prices.

Although the average price in London is still 2.9 times higher than in the northern regions, the property activity of 2020 has slowed in the capital. Asking prices rose just 0.8 per cent from April to May.

“Last year’s unexpected mini-boom is rolling on in 2021 with new asking price and market activity records defying predictions,” says Tim Bannister, director at Rightmove.

Bannister claims that some buyers are extending their budget where possible which has pushed the average price of property coming to market to a new all-time high, nationally.

“We are seeing the north play catch up with London in satisfying a pent-up need for space,” he adds.

“It’s no surprise that the north has seen the biggest gains,” agrees Becky Munday of Munday’s Estate Agents. “It is a market that has long held the biggest opportunity for growth and represents great value.”

The Rightmove report also highlights the fact that with the increasing assumption that working-from-home is here to stay, some London movers have bought in the top half of the country adding to the competition for every family home.

How long will it take to sell my London home?

It took longer to sell at home in London in April than anywhere else in the country.

Although selling times are down from 72 days per property in January to 57, the transaction time in the capital still lags the rest of Britain.

Scotland was the speediest region – it only took 27 days from marketing to completion north of the border, followed by 42 days in the north west and 42 days in the Yorkshire and Humber.

However, the Rightmove data reflects a very diverse collection of local markets in London warns analyst Lawrence Bowles of Savills.

“There are some pretty massive differences hidden in these averages between the inner London markets (such as Camden) and the outer London markets (such as Bromley),” he explains.

The London property market is also dominated by flats which are difficult to sell at the moment as the demand is being driven by families looking for more space.

“The short term dynamic appears to be that houses are flying off the market as soon as they’re listed, while flats are taking longer to shift, and London has a greater proportion of flats than any other region,” Bowles adds.

Will house prices crash after the stamp duty holiday ends?

Asking prices in the capital have nudged up 0.2 per cent over the last year, pulled down by the more muted and expensive inner London markets.

Bowles believes the pattern of outer London outperforming inner London and the regions streaking ahead will continue beyond the stamp duty holiday rush.

This is echoed in the Rightmove report by Bannister: “We can see little sign of activity abating and would predict that even with the end of the present stamp duty incentive that prices will continue to rise through the rest of this year and likely beyond,” he says.

Munday adds that newly vaccinated homeowners will start to feed more stock into the market soon.

Read More

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First-time buyers are snapping up central London flats with big discounts in the post lockdown property market

How to sell a home in the current property market: expert tips to increase viewings and boost kerb appeal

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