propertytalk Live! - UK property faces multi-speed recovery

propertytalk Live! - UK property faces multi-speed recovery

The history of the housing market is repeating itself as the traditional market leaders once again outpace the historic laggers, both in terms of house price growth and transactions.

Lucian Cook, director of research at Savills, has analysed 15 years of Land Registry data to see if history can tell us what to expect next in this recovery phase.

"There is now a certain inevitability built into the market," Cook said.

"The schism between the best and the rest is expected to continue to grow as the recovery progresses. Ironically, it is the least affordable but most affluent areas that are leading, and will continue to lead the market both in terms of price growth and activity levels.

"But the leaders are now clearly outperforming the laggers again. The bottom end of the market does not appear to have the potential to bounce in line with the top end, now or in the foreseeable future. Its recovery may only be possible if and when mortgage lending frees up, or as investors start to see potential in the local private rental sector.

"For a long time we have known that certain areas of the country (typically located in London and the South East) lead the recovery before the laggers (often the northern metropolitan areas) catch up. From this we see that the recovery ripple usually takes between five and ten years to spread across the country as a whole,"

Since the bottom of the market and during the current bumpy recovery there has been significant divergence in performance between the leaders and the laggers. Values in the leading 10% of the country grew by 7.5% over the past year and are now just a fraction off peak levels, while the bottom 10% of areas saw prices fall by 3% and are almost 20% off peak.