There is now clear evidence that the record value gap between the prime London housing markets and the rest of the UK has begun to close, with all regions outperforming the capital in the first quarter of 2016, according to latest figures from international real estate adviser, Savills.
The long awaited ripple of recovery out from London is now established, as buyers from the capital recognise that their buying power relative to the country has peaked and seek to take advantage of the equity earned in their homes over the post downturn years when London significantly outperformed the rest of the country, including the prime suburban markets within the M25.
Londoners accounted for 30 per cent of all buyers in the prime suburban and commuter markets in the first three months of this year compared to just 23 per cent in the first quarter of 2015. Their presence is most pronounced in the higher markets, accounting for 39 per cent of all buyers in the £1-2million bracket and 43 per cent of buyers of homes over £2million, up from 30 per cent and 40 per cent respectively in the first quarter of 2015.
To see a table of the Savills prime London and regional indices to the end of Q1 2016, please click here.
The strongest quarterly house price growth was seen in the outer commuter belt, up to an hour’s commute by train from the centre of London, but the recovery is now spreading into the broader South of England and, to a lesser extent, the Midlands and the North, though these regions are still 6.6 per cent and 12.5 per cent below their 2007 peak.
However, these averages conceal significant regional variations, with Cambridge, Winchester and Bath recording annual price growth of 10.6, 7.3 and 6.8 per cent respectively. This reflects a post credit crunch trend of urban locations outperforming village and rural properties.
To see a table of urban, village and rural growth, please click here.
“The years since the market bottomed out in early 2009 were characterised by much stronger house price growth in prime London than in the rest of the country,” says Sophie Chick, associate director, Savills residential research. “The stamp duty increases introduced in December 2014 changed the balance, with the impact on prices more significant in the higher value London markets.”