House price growth in the North is outperforming the South

Northern Ireland is the top performing region, with prices up 4.1% year on year in quarter two. The North East, North West, Yorkshire and the Humber, East Midlands and West Midlands, continued to outperform southern England, with average prices up 2.4% year-on-year. The North West saw a 4% rise in prices in the second quarter of the year while Yorkshire was close behind with 3.75 % growth and the North East 2.75 per cent.

Across England overall, prices were up 0.6% compared with Q2 2023, while Wales and Scotland both saw a 1.4% year-on-year rise. East Anglia was the weakest performing region, with prices down 1.8 per cent.

Robert Gardiner adds: “Housing market activity has been broadly flat over the last year, with the total number of transactions down by around 15% compared with 2019 levels. Transactions involving a mortgage are down even more, nearly 25%, reflecting the impact of higher borrowing costs. By contrast, the volume of cash transactions is actually around 5% above pre-pandemic levels.

“While earnings growth has been much stronger than house price growth in recent years, this hasn’t been enough to offset the impact of higher mortgage rates, which are still well above the record lows prevailing in 2021 in the wake of the pandemic. For example, the interest rate on a five-year fixed rate mortgage for a borrower with a 25% deposit was 1.3% in late 2021, but in recent months this has been nearer to 4.7%.

“As a result, housing affordability is still stretched. Today, a borrower earning the average UK income buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 37% of take-home pay, well above the long run average of 30%.”