News

London is another country

Immediately before the credit crunch, Northern Ireland went bonkers, partly because it was catching up with the rest of the UK, but mainly because of the influence of the then booming market in the Irish Republic.

Now we have a different regional picture. Central London remains strong. Cluttons estate agency expects prices to rise by 6% this year and a further 4% in 2011. “One of the key reasons is an acute shortage of good stock on the market and the influx of overseas buyers continuing to snap up properties and push up prices,” said Andrew Stanford, head of its residential professional division. “We expect this growth to continue well into 2014, as the City continues to recover and employment increases.”

Other parts of the country can only wonder at London’s strength. The latest survey from the Royal Institution of Chartered Surveyors (Rics) showed that, nationally, a balance of 32% of surveyors are experiencing rising prices. The balance is the difference between those reporting rises and experiencing falls.

Within that average, there is huge regional variation. The Rics survey shows, sure enough, that London leads the rest, with a balance of 65% of surveyors reporting rising prices, followed by the southeast (49%), the southwest (42%) and East Anglia (36%).

You might expect an old-fashioned north-south divide, but not so. Next is the northwest on 27%, followed by Scotland (21%), the West Midlands (19%) and the East Midlands (12%). That leaves three Rics regions (it doesn’t cover Northern Ireland) with falling prices; the North (ie, the northeast) at -2%, Yorkshire & Humber at -5% and Wales, bringing up the rear on -8%.

There are two ways of looking at this. One is a return to the traditional “ripple” market, with strength emanating gradually from London to the most depressed markets. Those markets have, after all, seen a rise in activity. The other is that London’s rise reflects special factors that will not last. To me it looks like a ripple, but it may be quite a weak one.