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We’re levelling up: North/South house price divide is narrowing

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Somewhere in the latest blizzard of record high house price figures and the surge in sales triggered by the stamp duty holiday, one thing has been overlooked: the great North South divide is decreasing.

A home is still far more expensive in London than Middlesbrough, but the difference is diminishing. 

For example, Zoopla says house prices in the capital rose a meagre 0.3 per cent in the past year, whereas in Middlesbrough they soared 10.06 per cent.

On the rise: Waterfront homes in Scarborough's harbour. Property website Zoopla reports the hottest housing markets are in Yorkshire, Humberside and the North-West

On the rise: Waterfront homes in Scarborough’s harbour. Property website Zoopla reports the hottest housing markets are in Yorkshire, Humberside and the North-West

And the same website reports that the country’s hottest housing markets right now are not in leafy Surrey or posh Central London, but in Yorkshire, Humberside and the North-West, as the pandemic property world undergoes its own ‘levelling up’ exercise.

It’s not just prices. The time between listing a home for sale and a buyer’s offer being accepted in the North of England is now three weeks quicker than in 2019, while the areas boasting the fastest sales are Wigan, Barnsley and Burnley, claims Zoopla. 

Again, contrast that with London, where homes now take two weeks longer to find a buyer than in 2019.

Nor is the trend likely to be a flash in the pan, with estate agency Savills forecasting that the North-West and Yorkshire and the Humber will lead UK house price growth with rises of 6.0 per cent in 2022 and 5.5 per cent in 2023.

And by the end of 2025, Savills predicts the North West will enjoy an eye-watering 28.8 per cent rise overall.

Across the UK, the average increase is set to be 21.1 per cent, while London stubbornly stays in the slow lane with only 12.6 per cent growth.

‘Some of the price rises we have seen were overdue; country prices had lagged well behind London for years and some re-balancing was required,’ says James Greenwood, managing director of the Stacks Property Search buying agency.

There are exceptions to the rule; the biggest of all being Cornwall, where demand has reached a record high since the start of the pandemic.

Tiny St Mawes sits on the south Cornwall coast, lined with holiday homes and fashionable hotels such as the Tresanton and The Idle Rocks.

It has seen the biggest rise in average prices of any seaside town over the past year, jumping nearly 48 per cent from £339,912 to £501,638 — the largest rise in the ‘race for space’ as people have quit the big cities for countryside and coast.

Can Cornwall keep this kind of appeal — and price tag — when homes in the north are still much cheaper?

Josephine Ashby, of John Bray & Partners, one of the county’s top agencies, says: ‘Cornwall has always been popular for its incredible landscapes and coastline. 

There’s a limited supply of property but there’s a broad demographic of buyers, so we believe confidence will remain.’

However, when looked at in terms of the two halves of England, even that stellar house price rise in Cornwall isn’t enough to balance out the much more widespread increases in the North, according to Rightmove’s Tim Bannister.

He says: ‘It’s the regions of Britain further north that are leading the way. While the gap remains large, with average prices in London still 2.9 times higher than those in the North, this ratio is now at its smallest since 2013.’

And he continues: ‘So far 2021 is proving to be the year of the northern mover, not only satisfying their pent-up housing needs, but in doing so also narrowing some of the huge price gap with London.’

Every house differs, but the Office for National Statistics has a comparison table for how much every square metre of ‘house’ costs in different parts of the country.

So a square metre in London’s Westminster costs £16,246, while in Rugby it’s £2,081. In leafy Winchester, it’s £3,910 but in Scarborough, a square metre of house would cost £1,567.

And in East Devon, where there are plenty of holidays homes to inflate prices, you pay £2,605 for a square metre; in South Tyneside it’s a snip at £1,319.

That means, obviously, that in most circumstances you get more space for your money if you head north and you get much less if you buy in the South. But things are changing — and fast.

In recent months, the Government has announced that part of the Treasury will be based in Darlington and some officials from the Ministry of Housing and Communities will move from London to Wolverhampton.

Some of Channel 4 has moved to Leeds and HSBC and Amazon are locating some of their operations to Manchester. The result will be that house prices in these locations will be rising soon.

Thanks to our changing priorities and the pandemic, suddenly things appear much less grim up north. 

On the market… out of the capital 

Lancashire: With four bedrooms and scope for a fifth, this single-storey Victorian home in Rossendale has plenty of character and a walled gardens. Fineandcountry.com, 01706 531 315. £500,000

Lancashire: With four bedrooms and scope for a fifth, this single-storey Victorian home in Rossendale has plenty of character and a walled gardens. Fineandcountry.com, 01706 531 315. £500,000

North Yorkshire: This five-bedroom, grade II-listed house, formerly two cottages, is in the hamlet of Low Row. There are lots of walks in surrounding Swaledale. Savills.com, 01904 617 820. £550,000

North Yorkshire: This five-bedroom, grade II-listed house, formerly two cottages, is in the hamlet of Low Row. There are lots of walks in surrounding Swaledale. Savills.com, 01904 617 820. £550,000

Cumbria: There are eight bedrooms in this home in Kirkby Stephen. The house has three acres and sits in the Yorkshire Dales National Park. Knightfrank.com, 01423 429 050. £950,000

Cumbria: There are eight bedrooms in this home in Kirkby Stephen. The house has three acres and sits in the Yorkshire Dales National Park. Knightfrank.com, 01423 429 050. £950,000

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Bloom secures planning for London ultra-urban warehouse developments (GB)

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Bloom has secured planning consent for two developments in central London. The developments are located in Hackney and Brixton and are the first to be carried out by Bloom for its €290.4m (£250m) ultra-urban warehouse joint venture with Angelo Gordon to acquire and develop sites in central London. In Hackney, on a site by the A12 next to 331 Wick Road, Bloom will develop two units, totaling 14,045ft², designed by Michael Sparks Associates. Construction will start next month, with completion expected in April 2023. In Brixton, at 146-156 Brixton Hill and Units 5 & 6 Waterworks Road, Bloom will develop five units, totaling 35,360ft², designed by Chetwoods. Construction will start in September, with completion expected in August 2023.

 

Both developments will be targeting a BREEAM sustainability rating of ‘Excellent’ and an EPC rating of ‘A+’ in accord with Bloom’s core sustainability objective to reduce greenhouse gas emissions through construction and operational efficiency. The schemes will include extensive urban greening through the implementation of green walls, green roofs, increased landscaping, bird boxes, and insect hotels to significantly improve the biodiversity; renewable energy in the form of solar photovoltaic panels on the roofs; and lorry, car, and cycle EV charging points to encourage sustainable and active modes of transport as well as enhanced power capacity to accommodate future EV transport technologies.

 

Tom Davies, co-founder of Bloom, said: “Our first two planning consents represent an important milestone for the Bloom team, which is working hard to deliver high-quality and design-led industrial and logistics schemes in supply-constrained inner London sub-markets”.

 

Sam McGirr, co-founder of Bloom, said: “These planning consents for well-located sites give us the opportunity to meet the high demand for convenience and speed from businesses, such as F&B delivery, post and parcel, e-mobility, self-storage and urban logistics and consumers in the local communities”.

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Could equity release be used to help more younger homebuyers?

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Younger first-time buyers could be given more financial help from the Bank of Grandma and Grandad, through the use of improved equity release products, a new report suggests.

The document written by Tom McPhail, of consultancy The Lang Cat, claimed that younger buyers are missing out because older members of their family are unable to satisfactorily tap into their property wealth.

Mr McPhail said: ‘Releasing some of the equity in a property means older homeowners can choose when and how they share their wealth with younger generations.

‘An equity release by grandparents of say £20,000 now, could be transformational for a 20 something struggling to raise a deposit and get on the housing ladder but would make only a very modest dent to the value of the grandparent’s house.’

Releasing some of the equity in a property means older homeowners can choose when and how they share their wealth with younger generations, says new report

Releasing some of the equity in a property means older homeowners can choose when and how they share their wealth with younger generations, says new report

The report acknowledged that equity release has endured a poor reputation in the past after customers suffered ‘severe’ financial knocks.

The sector has been criticised for encouraging people to take on debt, particularly later on in life.

There has also been other concerns about equity release, such as customers falling into negative equity where the value of a property is less than the loan taken out against it when house prices fall.

The report suggested that while the equity release sector has since begun to put ‘its house in order’, it is ‘still not perfect’ and some regulatory safeguards need to be strengthened.

It called for several issues to be looked at, including early redemption charges on equity release products.

It said that most providers apply a simple sliding scale of charges, for example 10 per cent in year on to 1 per cent in year 10.

However, it claimed that some providers apply an early redemption charge based on prevailing gilt rates at that time, putting customers at an ‘unfair disadvantage’.

This is because the fees are not transparent as there is no way a customer can know in advance whether they’d be liable for a charge and if so, how much. 

In the past, customers have also fallen foul of the small print on their equity release loans when it comes to early-redemption penalties – such as couples who must pay an exit fee unless both of them need to go into care.

The report also raised questions about interest rates on equity release products. It said providers should be consistent with their lending criteria and not move the goalposts after customers have taken out a loan, as this can make it harder for them to access a top-up loan in the future, potentially forcing them to remortgage. 

Equity release products could help people access their property wealth to help younger members of their family onto the property ladder

Equity release products could help people access their property wealth to help younger members of their family onto the property ladder

The report argued that equity release products could help people access their property wealth to help younger members of their family onto the property ladder.

Mr McPhail added: ‘Raising a deposit has become an increasingly significant barrier to getting on the housing ladder, with increasing numbers of first-time buyers having to rely on financial help from older generations.

‘Releasing some of the equity in a property allows older homeowners to choose when and how they share their wealth with the younger generation.

‘This more targeted approach gives them greater control to use their assets to the maximum benefit at the point of need.’

Raising a deposit is a barrier to getting on the housing ladder, with increasing numbers of first-time buyers having to rely on financial help from older generations, says the report's author Tom McPhail

Raising a deposit is a barrier to getting on the housing ladder, with increasing numbers of first-time buyers having to rely on financial help from older generations, says the report’s author Tom McPhail

Equity release: How it works and advice

To help readers considering equity release, This is Money has partnered with Age Partnership+, independent advisers who specialise in retirement mortgages and equity release. 

Age Partnership+ compares deals across the whole of the market and their advisers can help you work out whether equity release is right for you – or whether there are better options, such as downsizing. 

Age Partnership+ advisers can also see if those with existing equity release deals can save money by switching. 

You can compare equity release rates and work out how much you could potentially borrow with This is Money’s new calculator powered by broker Age Partnership+.* 

 * Partner link

Jonathan Harris, of mortgage broker Forensic Property Finance, said: ‘Equity release has historically been viewed as a ‘murky’, high-risk sector, fuelled by minimal regulation, poorly-qualified advisers, only a handful of lenders and extortionately high interest rates.

‘Fast forward to today and we see a dramatically transformed sector, benefiting from strict regulation, highly-qualified advisers, multiple lenders and access to very competitive interest rates. 

‘Not surprisingly, equity release is now a viable and growing market for older borrowers looking to utilise the gains seen on property prices to bolster lifestyles, as well as pass on wealth to children when they need it.

‘Those considering equity release should make sure they understand the implications and involve family in any decision-making. It is always important to seek advice from suitably-qualified advisers.’

It comes as a separate report by Legal & General suggested that one in every £90 spent by retired Britons is funded by equity release.

It said that equity release funded an estimated £3billion in retirement spending last year, although it didn’t mentioned the money going to younger generations towards buying a property.

Instead, the report’s survey of 2,000 homeowners found that those with equity release have most frequently used the product to finance home improvements, at 26 per cent.

It said equity release is also being used to support costs such as medical expenses at 17 per cent, maintaining living standards in retirement at 16 per cent, and paying off personal debt at 16 per cent, for example paying off interest-only mortgages. 

It suggested that equity release is likely to play an increasingly important role in financing care-related expenses, with 19 per cent of prospective homeowners citing it as a consideration.

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Allianz Real Estate buys prime office building in Rome (IT)

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Allianz Real Estate, advised by Dils, has acquired an office property in the centre of Rome. The transaction, worth circa €175m, is one of the most important to have been carried out on the real estate market in Rome in recent years.

 

The building, consisting of eleven storeys, comprising nine above-ground and two underground, has a gross lettable area of circa 22,000m² and has undergone a major refurbishment, offering the highest environmental sustainability and energy efficiency standards (LEED Gold Certification). The strategic location, between the CBD and Termini Station, is enjoying great success, especially among corporate occupiers. 

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