Regional Variations in the Housing Market

Regional Variations in the Housing Market

In a previous post, we looked at different agencies’ house price indices and the opinions of expert commentators regarding average price growth across the UK. However, it’s important to note that national averages mask a huge amount of regional variation in the cost of residential property, so in this article, we consider how market conditions differ across Britain.


Property investors have long been aware that there is a pronounced North-South divide within the UK, and 2015 saw that gap widen yet further. Below, we see this price-gulf illustrated in figures published by Nationwide, Rightmove and Zoopla.

Annual Regional House Price Change, by Source

Region Nationwide, Dec 2015

Quarterly figures

Rightmove, Dec 2015

Monthly figures

Zoopla, Dec 2015

Monthly figures

Scotland -1.9% No data +2.7%
N. Ireland +6.5% No data No data
North East +2.2% +1.4% +2.7%
Yorks & Humber +0.4% +2.8% +3.3%
North West +0.6% +4.7% +5.6%
Wales +0.7% +0.6% +2.2%
West Midlands +1.6% +5.5% +5.1%
East Midlands +3.6% +5.7% +5.6%
East Anglia +2.2% +9.2% +11.6%
South West +3.8% +5.0% +8.1%
South East +6.7% +9.2% +8.8%
Greater London +12.2% +9.9% +11.8%

Despite considerable variation in the statistics, there is a clear indication that properties in London, East Anglia and the South East appreciated most quickly in 2015. That’s good news for investors who are interested principally in capital gains. However, these gains have been accompanied by a growing sense amongst investors that very high prices are now making healthy yields untenable.

In Central London, prices are being sustained at least in part by super-rich overseas investors who come looking for a safe home for their money at a time when stocks, shares and similar vehicles might be looking too frail or risky. For them, the cost of borrowing is not a concern and rental yields are of less importance than the potential to make long term capital gains.

“Focusing on the income producing potential of property asset classes will be paramount in 2016.”

Savills Cross Sector Report, December 2015.



For investors of more modest means – and this represents the majority of BTL landlords – owning high value property in the capital is little more than a pipe dream. However, given a widespread expectation that house prices will rise by an average of only 3 to 4% per annum over the next five years, most will now be investing more for the sake of good rental yields than rapid appreciation.

Interestingly, when judged in terms of yield, the league table is transformed. Lower prices outside the South East translate into a better ratio between investment cost and rental earnings. On 14th December, The Telegraph illustrated the point when it published research by LendInvest, which listed the best British destinations for rental yield. It found that between 2010 and 2015, the top three cities were Manchester, Liverpool and Cardiff, with other cities in the North East, North West and the Midlands all performing well.

Nevertheless, it is the combined long term effect of both yield and capital appreciation that makes for a really successful investment, so in our next post, we’ll examine expert opinions on the prospects for house price growth in different regions.