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House prices: last two regions recover to pre-2008 peak as North-South property gap closes

·4-min read
 (Daniel Lynch)
(Daniel Lynch)

House prices in every UK region have recovered to pre-financial crash levels, 14 years after the credit crunch hit according to new figures released today.

The report may come as a surprise to Londoners, who have been facing spiralling property costs for over a decade but the figures show that the capital was the fastest region to recover, with house prices bouncing back within two years, according to home setup service Just Move In.

The average house price peaked at £290,261 before the financial crash, returning to that level by 2010. Despite a slowing market in recent years – in large part a result of how unaffordable London property has become – house prices in the capital have grown by 175 per cent since that peak.

The fastest and slowest areas to recover from the 2008 crash

Meanwhile, property values in Durham and Hartlepool only returned to their pre-2008 high point this month, the last two places in the UK to fully recover from the crash. Prices in Durham have now reached £122,300, while in Hartlepool they’re back to £133,000 after the property market surged during the pandemic.

The average UK home peaked at £190,000 in September 2007 and is now 142 per cent higher, at £270,000.

The 10 slowest areas to recover were all in the North of England, which has since a recent price boom as priced-out southerners look further afield for more affordable, spacious homes.

London and its commuter towns accounted for the nine fastest areas to recover, all rebounding within five years of the crash and well surpassing previous price highs.

St Albans was the second fastest to recover, followed by Oxford, Cambridge, Woking and Guildford. Windsor and Maidenhead, Chichester and Brighton all also recovered in five years or less.

Ross Nichols, co-founder of home setup service Just Move In, said: “The housing market has exploded over the past year, but it’s sobering to think it’s taken 14 years for every part of the country’s property prices to recover to the levels they were before the 2008 crash.

“Hartlepool and Durham are the last two parts of the country to hit that level, while Blackpool and Middlesbrough only recovered in the previous month.

“There’s a North-South divide when it comes to the recovery, with London and other southern cities bouncing back quickly, while northern areas are still lagging behind.”

North-South house price divide set to narrow

The most recent forecast from Savills suggested this trend will change over the next five years.

The estate agent predicts that the north-south house price divide is set to close, with prices expected to rise 18.8 per cent in the North West and Yorkshire and Humber, compared with 5.6 per cent in London.

“Given where we are in the housing market cycle, the north-south divide in house prices looks set to close further over the next five years,” said Lawrence Bowles, director of residential research at Savills.

“There remains more of an affordability cushion beyond London and the South., The Government’s levelling-up agenda has the potential to accelerate a rebalancing of the market, but only if it gains meaningful traction.”

“The potential for price growth looks more constrained in the London mainstream market (+2% predicted in 2022), which has become increasingly confined to more affluent households.

“This reflects the extent to which London prices became dislocated from the rest of the UK housing market through strong price growth from 2005 to 2016, something so pronounced it is expected to still limit price growth across large parts of the capital a decade later.”

The Savills forecast says London house prices will be buoyed by the capital’s prime market.

Separate research from property analysts LonRes showed buyers spent a record-breaking £11.6 billion on prime London property in 2021, a result of a new emphasis on bigger and more expensive houses.

Marcus Dixon, head of research at LonRes said: “In 2021 buyers bought bigger and spent more. Total property spend exceeded £11.6 billion in 2021, the highest annual spend since LonRes records began in 2000. Over half this total went on houses. The value of houses sold topped £6.1 billion in 2021, 26 per cent higher than the previous record spend in 2014.

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