Central London saw property prices stagnate in 2017 , falling for the first time since the great recession in 2008. Economists predict that London will continue to experience this fall for several years and won’t recover until 2021. Northern cities on the other hand will benefit from the government’s ‘Northern Powerhouse’ initiative, experiencing growth and rises during this time. Leeds thrives more so than any other city, and is expected to continue to do so for a number of years, as London property stagnates.
The Brexit Effect
The downturn in the London market is almost certainly due to the uncertainty caused by the ongoing Brexit negotiations. Since the result of the Brexit vote in June 2016, house prices across the country have slowed. Some experts forecast they will pick up again in 2019 when the UK leaves the EU. The guardian reported that the average London house price in a decade had dropped by as much as £18K, in areas such as Kensington and Chelsea, the average asking price had dropped by over £300K as London property stagnates whilst Leeds thrives.
According the KPMG there are other factors that have affected the London property market. Primarily this is due to stamp duty changes which were made in 2016. However, there continues to vast amounts of foreign investments in the capital. The Telegraph reported with KPMG Economics that there is a resilience in London and that the partner forecast market growth again by 2021.
KPMG’s chief economist, Yael Selfin, passed further comment on the subject. He said “London’s property market isn’t just made up of people’s homes. Property in the capital is seen as a safe haven asset by foreign investors as they plough money into properties. They will continue to do so after Brexit, especially if sterling remains weak.” He went on to say “We’re likely to see demand for property in the capital rise if the UK’s exit from the EU is done in a positive way. This will remain one of the most vibrant and exciting cities in Europe.” Many of the Northern cities however have experienced no such hardship, nor face similar fears, cities such as Leeds thriving.
Northern Powerhouse Initiatives
Forecasted to withstand the changes experienced in the country elsewhere are Northern cities. The government’s ‘Northern Powerhouse’ project will provide investment to the North at £3.4 billion in growth deals. £13 billion into transport infrastructure and £70 million will be invested into a schools strategy. Despite the Brexit uncertainty, northern cities – and Leeds especially – will receive a boost to their economies.
This investment will help create new jobs and a skilled workforce. It will drive a thriving cultural sector and will improve travel connections throughout the North. All of these factors will in turn attract ever more people to the region who will need housing. Leeds is proving itself an investment hotspot with higher yields than London. This is in turn increasing attention from foreign investors.
We have absolute confidence in Leeds, and other northern property markets. We advise both domestic and foreign investors to not only keep investing but to do so in the north. For more information on investment opportunities in the North, find out more here.