North/South divide set to widen even further where house prices are concerned

It looks as if the North/South divide is going to increase even further, at least as far as house prices go. This comes from a report by the Centre for Economics and Business Research in which it says that the value of properties in London will increase by 2.4 percent this year and by 2.3 percent next year. Yet property values in the North are set to fall over this period by between 3 and 4 percent, according to the CEBR.

This seems to shoot down the Government’s claim that they are boosting the economy on the regions. Dame Anne Begg, the Labour MP, says that David Cameron and George Osborne’s plan has clearly failed. She added that the Government should change course to get the economy working again.

House prices rose by 11 percent across the UK in 2007 but fell by a drastic 8.1 percent at the peak of the economic crisis in 2009. Then they came back up by 7.4 percent in 2010 and then fell slightly last year by 1.5 percent. They are expected to rise again slightly this year.

As usual, homeowners in the South as well as London will be the best off according to the CEBR. Homeowners in the North will be the hardest hit. This trend is caused by rising rents and investors buying property in London and the South East because it is a pretty safe investment during the Eurozone crisis.

Douglas McWilliams, the chief executive of CEBR, said that the election of Socialist President, Francois Hollande, in France, could also be fuelling the trend. He said that if the proposed top tax rate of 75 percent is implemented in France, then we will be seeing many more rich French people wanting to buy homes in London.