Historically, UK property prices have demonstrated a distinct spatial pattern over time, rising initially in a cyclical upswing in prime central London, then wider London and the south east, before spreading out nationwide. This is known as the ripple effect, and a glance at the property market suggests that history is repeating itself, according to haart estate agents.
As many areas struggled to recover from the 2008 global financial crisis, the north-south divide returned to plague the British housing market, as London, which has long operated in its own microclimate, recovered strongly from the downturn, with house price growth in recent years outpacing the national average by some margin, adding to wide regional differences between the capital and the rest of the country.
But house price growth in London, widely considered to be the boiler room of the residential property market, is no longer roaring as buyers find properties increasingly unaffordable, face stricter mortgage affordability checks and higher taxes.
“Typically resilient, London was the quickest to recover following in the 2008 recession. However, the multitude of blows that have befallen its property market over the last couple of months are obviously proving too much to bear,” said Paul Smith, CEO of haart.
In contrast to the slowdown in the capital, the estate agency reports that the market is seeing a ‘reverse ripple’ effect, as a revival in activity in England’s regions begins to filter through into outer London areas.
Smith continued: “The evidence from our branches is that areas around 100 miles from the capital are where the market is reviving, and this is spreading towards the South East and London – a complete reversal of the traditional ‘London first’ pattern we’ve grown used to.
“This could be a historic realignment of our property market away from central London, or a purely post-Brexit ‘flash in the pan’ phenomenon. What is clear is that since June, Britain’s property market has been turned on its head and London, for a change, is beginning to rely on the rest of the country for life-support.”