Regional house price performance has significantly diverged across the UK, with northern regions demonstrating stronger growth while southern markets continue to struggle with affordability constraints and declining sales rates. This trend marks a reversal of the long-term pattern observed since 2005, where London recorded average annual price growth of 4.5% compared to the North East's 1.9%.
Since interest rates began rising in 2022, the Midlands and northern regions have shown consistent recovery and continued growth. The North and Yorkshire have recorded price increases that outpace inflation. In contrast, southern and eastern regions remain in recovery mode, with some areas still experiencing price falls.
Northern Ireland was the strongest performing region in Q3, with annual price growth of 5.9%, though this was down from 8.6% in Q2. The strongest performing regions are concentrated in northern England, Scotland, and Northern Ireland.
Affordability is a key driver of this regional divergence. Higher mortgage rates have created an affordability ceiling in southern markets, where elevated house prices relative to incomes have constrained buyer demand. This contrasts with northern regions, where lower absolute prices maintain market accessibility.
Sales rates also vary significantly, with Rightmove data indicating that 91% of homes for sale in Scotland find a buyer, compared with 71% in the North West of England. In the South East, only 56% of properties find buyers, and London records just 42%. Zoopla reports that only 30% of sellers in London secure a buyer within three months, while properties in the North East and North West have a 50% or greater chance of finding a buyer within the same timeframe.
Flats continue to underperform relative to houses across most regions, contributing to challenges in London's market due to its higher concentration of apartment stock. Demand for flats has declined in London, Wales, the East Midlands, and the South East.