Could Yorkshire could buck the market trend when it comes to following London?

By The Newsroom
Thursday, 27th July 2017, 12:03 pm
Updated Thursday, 27th July 2017, 1:04 pm

We look at property market forecasts and ask if Yorkshire will buck the trend when it comes to following London.

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In a year beset by Brexit, shock election results and rising inflation rates, it’s little wonder that some homeowners are hunkering down rather than moving house.The effect has been a shortage of homes for sale and the latest Rightmove price index highlights this, along with signs of affordability issues. Rightmove’s Miles Shipside says: “In spite of high demand and lack of suitable supply, stretched buyer affordability continues to act as a price brake, though all regions have seen year-on-year price rises.”London asking prices have risen by just 0.9 per cent since July 2016, Yorkshire’s have increased by a respectable 4.1 per cent, only out-performed by the East Midlands at 4.9 per cent. The most recent data from the Land Registry’s index, which charts what properties sold for in May, shows the North East had the lowest annual house price increase rising just 1.6 per cent since May 2016. London was second from bottom at three per cent. Yorkshire was comfortably mid-table at 4.4 per cent and the East of England showed the highest year-on-year rise in sold prices at 7.5 per cent.Miles Shipside believes the fundamentals that underpin a healthy property market remain robust. “Low unemployment, low interest rates, strong demand and historic under-supply of homes are mitigating any wobbles in confidence.” However, he cautions: “Wage growth is muted, there are signs that consumer credit is tightening and at some point there will be the first rise in mortgage interest rates for a decade or more, which will come as a shock to buyers. We can see now that price rises are muted despite high housing demand, indicating we have left the stage of the cycle where price rises exceed the rate of inflation.”This is most evident in London and the traditional trajectory is that where London leads, the North follows six months later. Yet there are signs that Yorkshire could well buck that trend.Lucian Cook, Savills head of residential research, says: “Prices in Yorkshire and the Humber haven’t seen anything like the same amount of house price growth as London and the South over the past decade. That means they are less constrained by things such as mortgage regulation and have more remaining capacity to take advantage of continued low interest rates. Similarly, potential buyers are less likely to get spooked by the current political uncertainty in Westminster and Brussels and will be more encouraged by local economic drivers.”Mark Manning of Manning Stainton estate agents also believes that the North follows South pattern is finally changing as the Northern economy gains strength. “I’m not convinced that the property market conditions in London and the South East will spread North. Traditionally that is what happens but this time it’s different. London will be more affected by Brexit, whereas if you look at the pace of growth and investment in the commercial sector here, especially in Leeds, business looks good. A lot of people are moving here to work and while they will rent at first, many of them will go on to buy. I don’t see any signs of a slump. If interest rates go up then the market may slow but until then conditions remain very attractive for buyers.”Patrick McCutcheon of Dacre, Son and Hartley estate agents, predicts the supply of homes for sale will remain at a low level for the foreseeable future. “There is no question that first-time buyers and those in the middle market have been frustrated by a lack of choice. It is difficult to be certain what is holding sellers back. Interest rates remain very competitive, stamp duty obligations are softer on the majority than they were and employment remains healthy. The actuality of Brexit and the fallout from the recent general election are relatively new issues, so it’s hard to pin the blame on them.”He agrees with Rightmove’s forecast that price growth will slow. “I think it will ease due to income drag holding back what borrowers can secure from lenders, so it is hard to see a flood of property becoming available for sale whilst the politicians steer us through the exit from the EU.”