House Prices Set For Greater Regional Variation

Summary: The growth of English house prices is slowing. In contrast, both Scottish and Northern Irish house prices are heading for boom periods, according to new figures. Nationwide predicts that house prices in Scotland and Northern Ireland are set to become increasingly dislocated from trends in England and Wales, as the countries have witnessed far faster house price growth over the year, increasing the need for larger mortgages.

The growth of English house prices is slowing. In contrast, both Scottish and Northern Irish house prices are heading for boom periods, according to new figures. Nationwide predicts that house prices in Scotland and Northern Ireland are set to become increasingly dislocated from trends in England and Wales, as the countries have witnessed far faster house price growth over the year, increasing the need for larger mortgages. House prices in Northern Ireland rose five times faster than the UK average for the past 12 months, while the last quarter saw house price inflation in Northern Ireland outpace the UK average ten fold. Scotland has also seen house price growth above the UK average. The Northern Irish and Scottish housing markets are booming and, like their governments, have become increasingly devolved from the UK, concluded Fionnuala Earley, Nationwide's group economist. Meanwhile, within England, the south has resumed its position as the focus of house price growth. House price inflation in the south of England has now outpaced the north for the third successive quarter. This follows an extended period when the south lagged behind as buyers appeared to reach the limits of affordability. London is also once again the city with the fastest house price growth, with inflation dampening in northern cities. Nationwide reports that this is also having a knock-on effect on the areas surrounding the capital. There is a clear pattern of acceleration in house price growth in the south in the regions closest to London, compared with last year. At the same time there is clear deceleration in all of the regions in the north, concluded Ms Earley. According to Nationwide's quarterly house price index, prices across the UK fell back sharply in the second quarter of the year from 2.2 per cent to 0.9 per cent. However, annual growth has remained stable.