North-South divide develops in housing market – is it a cause for concern?
The latest housing market report from the surveyors’ body RICS will provide further cheer for most of those selling homes.
The June 2009 report suggests that the pace of collapse in prices continues to ease, the volume of sales has nudged up and there appear to be more buyers. And there is an ever decreasing amount of homes competing for the rising number of buyers.
This survey does seem to fit with the trend of earlier RICS surveys and a growing number of other indicators that are being read by some pundits as pointing to a bottoming out in the market.
Calling the bottom of the market now would be a brave call, given the huge number of threats not just to the macro economy, but also to the housing market more specifically.
Indeed, for me the really interesting story in this survey is that we may be seeing a re-emergence of a north-south gap in the performances of the market in England and Wales.
While the Scottish market remains perkier than markets south of the border, London is seeing the most favourable turnaround in fortunes. Surveyors there expect price rises and a strong rise in sales.
The survey results for “expected prices” for the South East and the South West are also much improved and look better than the results for the more northerly regions.
This apparent growth of a north-south differential is a point noted by house builder Bellway in its most recent interim management statement.
This does seem to suggest that something other than mortgage availability is holding the markets down in the northern regions.
One strong possibility may be that we are starting to witness the impact of unemployment on the market, bearing unevenly on the regions.
It is worth noting that the only region in England to have shown a fall in the net price balance in the latest RICS survey was the West Midlands, which has been hit hard by unemployment.
It’s still early days, but if we are witnessing the early impact of rising unemployment this survey provides perhaps more cause for concern than it does cause for celebration.