It’s not particularly newsworthy to suggest that the property market north of London has been doing considerably better than the capital recently, with the East Midlands and North West doing particularly well.
A Financial Times article examining Land Registry data showed that speculators are now moving North in large numbers into cities like Manchester, Leeds and Sheffield.
The analysis showed that 11 of the top 15 cities where homes were bought and sold within 12 months, also known as ‘flipping’ a property, were in the North, with Burnley taking the top spot as well as being the country’s cheapest area by local authority for buying a house at just £81,352.
In contrast, the capital and Greater London area don’t appear at all in the top 15 whereas in previous years they had featured prominently. Prices in Central London came to a standstill last year after a steady decline from about 2015 onwards, with demand and supply both taking a big dip.
The overall trend for flipping has been declining ever since the financial crash of 2008, and 2018 was no different with a not insignificant £4.1bn worth of properties being sold twice in 12 months; however, this represents a decrease of £200m in the last year.
It is also thought that the recent increase in Stamp Duty on high value homes, sometimes running into tens of thousands of pounds added on to the price of such a home, has had an effect by making the gains or potential profit negligible.
Aneisha Beveridge, research analyst at Hamptons, told the Financial Times: ‘Some Northern areas are more resilient. Lower property prices mean that some of the homes bought by flippers fall under the £125,000 stamp duty threshold.’
Just three years ago the top 15 areas for flipping included Kensington and Chelsea, London’s most expensive boroughs, but they have since dropped out owing to the enormous average house price which is currently £1.2m, even after a 14% decrease in values over the last two years.
The price increases and the resilience of the housing markets in the Northern Powerhouse areas owe much to economic acceleration caused by increased house building, job creation and investment which has in turn attracted inward migration from other regions and abroad.
‘Price growth in the North will continue to outpace prices in the South, as these are the areas worst affected by affordability pressures,’ Beveridge said.
It’s likely that, through rapid expansion in house building and construction projects, local business have been able to hire more productive and talented staff to allow them to turn the likes of Manchester and Leeds into the tech hubs of the UK and Europe.
Whilst flipping isn’t something many participate in due to its volatile nature, it’s worth noting the shift in focus for investors who are severely profit driven and ruthless.
