The gap between house prices in the north and south is set to widen sharply with home owners in the South East, East, South West and London emerging as winners, figures from the Centre for Economics and Business Research reveal.
The think tank has forecast that property in London would increase in value by 2.4% this year and would rise by another 2.3% in 2013. In comparison the CEBR has forecast falls totalling 3.1% in the North West and 4% in the North East over the two years.
The trend is being driven by soaring rents and wealthy investors spooked by the eurozone crisis buying property in London and the South East as a relatively safe bet, the CEBR’s report said.
Douglas McWilliams, chief executive of the CEBR, claimed that the effects could be further fuelled by the election of socialist President Francois Hollande in France.
McWilliams said: “Demand in the London market remains resilient with the ongoing eurozone drama piquing international interest in the capital.
“Furthermore, we can expect an abundance of affluent French citizens to be shopping for homes in London if President Hollande’s proposed 75% top rate of income tax is enacted.”
David Sansome, Managing Director at Sansome & George said: “Prime London property has, like gold, always been seen as a “safe haven” in times of economic challenge and, since the emergence of the EU in particular, it has become easier for overseas investors to purchase in the UK.
The market has always had a “ripple effect” from Central London and property prices in the South East have tended to follow the lead set by the capital.”
