U.K. Home Prices to Rise Most Since 2009 on Midlands Gain
U.K. home prices will rise 2 percent next year as markets outside the affluent London and southeast region start to recover from four years of declines, property broker Hamptons International said.
Gains in the Midlands and northern England will drive the strongest nationwide price growth since 2009, the London-based broker said in a report today. Values will climb another 2 percent each year through 2015 and 4 percent the following year, it said.
While home prices have been rising in and around the U.K. capital, they dropped steadily across much of the rest of Britain, particularly in northern areas hurt by falling employment since the onset of the financial crisis. Now values have fallen to a point where homes are becoming attractive to buyers again, Hamptons said in the report.
“There’s been four years of negative movement in the North and the Midlands; now there’s really good value out there,” Adam Challis, head of research for Hamptons, said in an interview. “The yawning gap between London and the rest of the country will moderate.”
Prices in the Midlands will gain 3 percent next year, the most of any U.K. region, according to Hamptons. The north and south of England will advance 2 percent while values in the London will be little changed.
London prices have risen 24 percent from a May 2009 low as better job opportunities fueled demand and foreign investors bought luxury homes to protect their wealth from volatile markets elsewhere in the world. Homes in the city’s most expensive neighborhoods recouped their losses following the U.K. credit crisis and prices are now 15 percent above their March 2008 peak, according to broker Knight Frank LLP.
Those gains are likely to stall next year as buyers are deterred by increases to property-transaction taxes and concerns that the government may introduce on annual charge on luxury properties, Hamptons said.
An improving U.K. economy will also affect prices in 2013, according to the report. The country exited recession in the third quarter as gross domestic product surged the most in five years, boosted by the London 2012 Olympic Games.
“There’s a modest improvement in the broader economic backdrop and lending environment,” Challis said. “Consumer sentiment has been severely eroded over the past few years and it’ll take more than one quarter of good news to turn that around.”
Residential real estate prices in England and Wales are down 11 percent from the November 2007 peak, according to the U.K. Land Registry. The average home was valued at 162,561 pounds ($262,780) in September, a gain of 7 percent from an April 2009 low.
Around 720,000 transactions will be completed in England, Scotland and Wales in 2012, Hamptons estimates. That’s about half the number of sales before the slump, Challis said.
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