Will the rest of the UK’s house prices ever catch up with London’s?

It’s no startling revelation that house in London are considerably more expensive than in other parts of Britain, but recent developments show that the gap between prices in the capital and elsewhere in the UK is closing. Could we ever see a day when they come onto a level field?

A three-bedroom terraced house in London can cost over £1m, while similar house in Blackburn, Lancashire can be bought for less than £65,000. With a price difference that large, it’s difficult to imagine that houses in Blackburn will probably never be worth as much as London ones.

Blackburn, sadly, is a deprived area in parts so it’s perhaps unfair to use it as a comparison. In other areas of the country though, house prices have risen faster than London. In the last year, average house prices in Bristol have increased by 14% and in Cambridge by 13%. In London, the increase is 11%. Showing it’s not necessarily a north/south divide, property company HouseSimple has predicted Manchester and York to be among cities enjoy a house price boom over the next three years.

The house price increases reflect the increase in prosperity in many areas of Britain. Barclay’s Bank household wealth index revealed that after London, the top five wealthiest places in the UK after London are South East England, Eastern England, the South West and Northern Ireland. All these areas have experienced an increase in house prices.

While the gap between London prices and the rest of the country is still huge, it is narrowing. Some experts, like Meryn Somerset Webb who writes for the Financial Times, predict a crash in London house prices. She believes that London house prices are overvalued and will soon fall, and that many people will leave London because for the same price as a small house in the capital, they can buy a much larger one in other areas of the South of England.

Also, the French Bank Societe Generale has predicted that London property prices could fall by more than 30% following the vote to leave the European Union. A spokesman for the bank said:

“We see a classic housing bubble in London and Brexit as the trigger for the correction … Given the current ratio of prices to incomes in London, a price correction of even 40-50% in the most expensive London boroughs does not seem impossible.”

UBS Wealth Management also predicts that London house prices will fall, though it has predicted a less drastic one of 5%.

In some areas of London, house prices have already dropped in recent months. According to the real estate website Zoopla, Kensington & Chelsea has seen an average fall of 9.24% since April, and in Westminster the fall is 8.4%

If house prices continue to fall in London and rise in the rest of Britain, the narrowing of the gap will be welcomed by many, but no property experts are predicting that house prices in the UK will catch up with London any time in the foreseeable future.



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