The Great House Price Division: London Demand Rising Quicker Than Rest of UK

Ever since the housing market crashed in 2008, its future has been very uncertain. With prices falling or remaining stagnant around the country for some years it appears now that there may be shoots of recovery. Recent events like the What House? Awards highlighted the great work being done by developers up and down the country, and showed that even with increasing demand, supply is growing to meet it. It also showed that confidence is returning and the market showing signs of increased growth.

However, while the markets might be gradually responding across the UK, there is one part of the country where things have exploded. In London the markets are shooting up by as much as 40%, leaving the small percentage points increase across the rest of the country in its wake. This is leading many people to call it ‘the great housing divide’.


A recent report into the phenomenon covered 179 regions in the UK found that prices have gone up by as much as 40% in certain popular areas of London since the 2007 high water mark of the national market. However, house prices in other areas of the country fell by as much as 45%. Areas like Blaenau Gwent in Wales and Hartlepool have been particular badly hit.

What this means in practice is that many people are being priced out of the market in London. Many key workers such as nurses and teachers are simply unable to afford a house in London. But in many other areas of the UK, the growth has been limited or even non-existent. The formation of two separate markets is a worrying trend and it looks set to worsen in coming years.

One of the major causes of the problem is that a lot of money is coming in from abroad to purchase properties but only in the capital. There are stories of developers selling whole apartment blocks from plan in some areas of London. And yet some developers are finding it hard to get investment and interest in other areas of the UK. If this pattern continues, there will be a disproportionate amount of development in London and the South East compared to other areas. This has serious and far-reaching consequences beyond the housing market and needs to be addressed.

It also means it is extremely difficult if not impossible for people to move from low cost housing areas into these fast growing markets. This is essentially causing an economic segregation and splitting the country in two.

What needs to happen and hopefully what will if we are to use the What House? Awards as an example, is for developers to focus their attentions on quality housing developments at affordable prices. By providing quality homes at good prices across the country, this will encourage the market to grow at a more steady and even rate.

What we need is concerted and equal growth, not a rapid inflation that could be potentially dangerous a few years down the line. We need to learn the lessons from the past, and quickly.

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