The North-South house price divide is expected to narrow over the next five years, with house prices overall going up by nearly 15%.
According to estate agent Savills, house prices will go up by 14.8% from 2019 to 2023, pushing the average price of a property up by £32,000 to £248,000.
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Savills says the traditional North-South divide will be turned on its head, with the Midlands, North and Scotland expected to see the strongest price increases.
House prices in London and the South East are only expected to rise by 4.5% and 9.3%, respectively.
By contrast, house prices the rest of the country are predicted to see double digit growth.
Prices are predicted to go up the most in the North West by 21.6%.
Other areas forecast to have high growth include Yorkshire and Humberside (20.5%), the East Midlands (19.3%), the West Midlands (19.3%) and the North East (17.6%).
Outside of London key regional economies such as Manchester and Birmingham have the capacity to outperform their regions attracting both local and investor buyers.
Mainstream house price forecast
5-year house price growth
Yorkshire & Humberside
East of England
Source: Savills Research
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London out of reach for most buyers
In recent years house prices have soared in London and the South East, putting them out of reach for many people, especially those looking to get on the property ladder.
London house prices have risen by 72% over the past ten years, well ahead of any other region. The average home buyer with a mortgage now pays just under £429,000 and has a household income of almost £76,000 – 58% higher than the UK average.
Even with borrowing at over four times that income, these households still need a deposit of £123,000.
Savills says that while Brexit will continue to hit prices, particularly in London and its commuter belt, local market affordability is expected to affect price growth over the longer term.
Lucian Cook, Savills head of residential research, says: “Brexit angst is a major factor for market sentiment right now, particularly in London, but it’s the legacy of the global financial crisis – mortgage regulation in particular – combined with gradually rising interest rates that will really shape the market over the longer term."
He adds: “That legacy will limit house price growth, but it should also protect the market from a correction.”
The news comes after Nationwide released a report that showed house prices are rising at their slowest pace in five years.
Britain’s biggest lender said that annual house prices rose 1.6% in October to £214,534 – the lowest rate of growth since May 2013.
Nationwide says the squeeze on household budgets and the uncertain economic outlook is likely to have dampened demand, even though borrowing costs remain low by historic standards and unemployment is at a 40-year low. However, the lender still expects prices to rise by 1% this year.