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Changing property gap could boost UK mortgage demand

Date: Wed, 12 Apr 2006

The property price gap between the north and south is at its lowest level for eight years and a possible sign that the UK mortgage market is changing, according to new figures.

The latest Halifax House Price Index discovered a £12,350 fall in the property price difference, with southern homes now costing on average £79,400 more than similar northern homes.

However, market experts are predicting that the gap is set to widen over the coming years, especially as the London market starts to recover.

Howard Archer, chief UK economist at Global Insight, commented: "It is fairly clear that London is moving ahead again, if prices rise much more in the near term there will be problems."

The index showed that the cost of north-west based property has increased by 9.4 per cent over the past year, compared to 1.7 per cent rises across the south-west. However, the continued increase in household bills could lead to a reduction in prices in the long-term.

Mr Archer explained that "people's disposable income is going to remain pretty muted for some time to come," which could have an impact on the market and increase the "chances of a sharp correction later on".


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