Could falling housing prices in the South cause investors to look North?

There has been some speculation that the new house building market is expected to slow dramatically soon, as perceptions of lower immigration to come lower buying prices and cause builders to under-invest. Will the presence of already-built but under-invested properties in the North cause a shift in buying patterns?

Will housing prices fall substantially?


Many experts have predicted a short-term drop in high-end and investment housing prices following news of the Brexit vote. However, some also say that combining that market hiccough with the falling value of the pound could pop a ‘Brexit Bubble’. That prospect might become a self-fulfilling prophecy as builders abandon deals and buyers attempt to renegotiate terms.

Both the Treasury and Hometrack’s insight director, Richard Donnell predict short-term drops of around 20% in property prices, and many banks expect mortage approvals and sales generally to fall by as much as 10% over the next 18 months. Donnell also pointed out that this effect will be felt most strongly by housing markets in London and the South.

Will it go long term, though? Few experts can say much more than ‘maybe’.

Is a shift from buying in the South to the North likely?


It seems that shift was already happening before the surprise Brexit referendum. The Government has been moving to limit the demand for investment housing, particularly in the South’s more inflated markets, in efforts to prevent just this sort of housing bubble, and to keep first time buyers in a market increasingly dominated by buy-to-let mortgages. The end result has been a difficulty for some investors in getting enough credit to make the expensive property investments that the South is characterised by.

As lower property values in the North were already starting to attract those investors form the south that could only get a smaller mortgage. As the likely return on southern properties falls, the more stable (and not yet inflated) prices and expected returns in the North become that much more attractive.

In short, you should expect to see a lot more southern interest in northern properties, at least for the next 2 years, and quite possible in the long term.

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