Thursday, November 25, 2010
North-South Real Estate Divide Growing
We’ve all been brought up on the notion of a North/South divide, it’s nothing new. Yet in recent years the economical gap has widened considerably. Figures clearly reveal that since 2003 growth in London and the South East has steadily and significantly overtaken the rest of the UK.
Moving up North might mean the cost of living is lower, but if I want to sell my house, or find a job, I’m going to be faced with much more of a challenge than if I opt to stay down south. The International and thriving economy that has spread out of London and into the South of England also makes it more robust and less vulnerable to the effects of government cuts than economies in the north.
Centre for Cities, an independent research institute recently carried out a study which produced results that illuminated the major disparity in employment prospects between people living in the northern and southern regions of the country: ‘for every extra private sector job generated in the North and Midlands between 1998 and 2008 ten were created in London and the South’.
A large number of multi-national businesses have set up camp in the south, which creates a diverse climate and global links which are not only finance based but also political and cultural. Experian predicts that London and the South East is likely to attain perhaps up to 475,000 jobs in the years approaching 2015, a huge 43 percent of all new jobs in the UK during that period. This will be the result in part of Government plans to rebuild the UK economy, with the South, with its promise to deliver, as the key area of focus.
Employment cuts in the public sector will have an impact but as they only represent a fifth of all jobs in southern regions the hit is expected to be far less painful than in other areas. This employment expansion is expected to reach into most areas but chief industries to benefit will continue to be in the service sector and high-value manufacturing. Finance, IT, business services (FBS), and engineering have the potential to flourish.
However, with new employment growth at its most intense in the capital, house prices in London and the South East are expected to continue to be well above the national average which will put still more pressure on housing markets particularly around London and the commuter belt.
Out of the last 17 quarters and since Q1 2009 has risen by 19 percent compared with the North at nine percent. It’s expected that the numerous restrictions that will suppress the market nationally over the medium term will be subtler and less aggressive in the South making economic prospects, if still undeniably low key, nevertheless more optimistic.