A two-stage recovery is emerging in the housing market as a surge in house prices in London leaves the north of England trailing.
Speaking at the Building Societies Association conference Martin Gahbauer, chief economist at Nationwide Building Society, told attendees that the gap between price rises in London and those in the North-East and North-West is continuing to widen.
Gahbauer says the average house price in the capital has gone up by 16.5% since the trough.
London prices are currently 7% below the market peak in 2007 but are likely to return to 2007 levels in the next 12 months.
Gahbauer says: “Compare London with regions in the north – they have seen some rebound in house prices in the past six months or so but the picture has generally been bleak.
“So while we had a pretty uni-form downturn across all regions in 2008 and 2009 the house price recovery is now developing into a two-stage one, with London and the South-East showing a strong rebound and northern areas taking a flatter profile.”