House price growth rates are growing across the country, but as is always the case certain regions are dramatically outperforming others. However, what is becoming apparent is that the UK’s regionalised property market is becoming more and more localised.
The clear run away region winner is East Anglia, which in the year to August 2016 has seen an impressive house price growth of 13.2 %. This is all the more remarkable given that house price growth within London (where one would assume it be naturally higher) has only experienced growth of 12.3%.
This in itself is interesting as it is traditionally the South East of England that is considered to be one of the UK’s hot spots in terms of house growth. While we could expect this region to have a house price growth rate lower than that of London, we would certainly expect it to compare favourably with East Anglia, if not markedly higher. Surprisingly though in the year to August 2016 this has not been the case and it has experienced a house price growth rate of only 11.9%. However we must put this in context, the Midlands for example has only experiencing a growth rate of 6.4%, and Scotland has experienced the lowest house price growth rate of the UK at only 3.4%.
So in broad terms, London and the entire South-East has performed stronger than the rest of the country as is expected, but it is the localised differences that are interesting to see. As always, we must ask why the UK’s regionalised market is becoming localised, and why house price growth rates are varying so dramatically across regions.
Let’s look at East Anglia first. It’s fair to say that there are some obvious reasons as to why this region is experiencing such exceptional growth when compared to other regions of the U.K. The most obvious being it’s proximity to London. In terms of accessibility and given its transport links and the length of journey times it compares very favourably to other regions.
One could also postulate that as the house prices of London go ever upwards and have become increasingly unaffordable to many, priced out people have started looking elsewhere and further afield than they traditionally might have. There’s a strong argument to say that London is paying the price for its early success. With an average house price of £645,833 pounds, more than double the national average, more and more buyers have to look outside of the capital for homes. If this is the case then it creates ripple effect which in turn increasingly means that regions are now outperforming the city.
What is most interesting though is where they are looking. For a long time the South East has benefited from its proximity to London, but as a result perhaps it too is becoming oversaturated. East Anglia has always been seen as somewhat of a lesser cousin, but this could be the very thing that is now playing in its favour. It’s traditionally slow growth compared to the South East is now its boon. For buyers it offers a market less saturated with more potential to take advantage of.
If this theory as to why the UK’s regionalised market becoming localised rings true, then in the year ahead, we can expect the market to become increasingly more localised, with the key regions of the South-East and East Anglia being the main beneficiaries. Only time and the numbers will tell.
Source: Gilmore, G., Knight Frank’s Head of UK Residential: From the UK Residential Research presentation, London, 2016