Recent forecasts from the Centre for Economics and Business Research (CEBR) has predicted a sharpening increase in the divide between house prices in the North of England and house prices in the South.
The economic forecast and analysis organisation have suggested that whilst house prices in some regions in the North of England could decline by over 2%, others in the South could potentially see price rises of 2% or more.
The CEBR think tank argue that the ongoing economic crisis in the eurozone is helping to boost interest in the South, particularly the London property market. The ongoing low in interest rates and the lack of new properties being built are also considered to be helping to boost the price of housing in the UK.
London is often seen as a safe haven for European property investors. The introduction of the Euro in the late 1990s was considered one of the drivers behind the rise in property prices in the top areas of London.
Since the beginning of the eurozone crisis, London house prices have continued to rise despite falling across the country. Again, many experts believe this is partially due to foreign investors looking for a safe place to keep their money.
The French government have indicated that they plan to introduce a top rate income tax of 75%. The CEBR suggest that as a result, London can expect an ‘abundance of affluent French citizens to be shopping for homes’.
Despite this, others warn that the property market in London will not be safe if there was a sudden collapse in the eurozone and some suggest that property prices in the more affluent areas could potentially slump by as much as 50% over the next five years.
However, the CEBR have indicated that they have not factored a collapse in the eurozone in their forecast as there are so many unknowns.
The CEBR forecast was broken down into 11 regions across the UK. London is predicted to see house prices rise by 2.4% this year and 2.3% in 2013. The South East of England is thought to be the next biggest location for house prices, with rises of 2% this year and 2.4% in 2013.
The East of England and the South West of England are predicted to see the next biggest rise in house prices, going up by over 1.5% this year and about the same next year.
The only other two regions that have been predicted to see house prices go up in the next two years was the East and West Midlands which will see rises of over 1% in 2012 and greater rises in 2013.
For Yorkshire and Humber and Wales, house prices are predicted to fall by around 0.5% this year and 1% in 2013. The North West of England is predicted to suffer bigger falls in prices, 1.9% in 2012 followed by 1.2% in 2013.
The North East of England and Scotland are expected to see the worst falls in prices this year, with falls of over 2% predicted. Whilst prices in the North East are expected to fall again in 2013, the CEBR have indicated that prices may slightly rise again in Scotland.