Mail Online: Rise in value of a London flat is enough to buy a house in the North
Fri 01 Mar 2013
Rise in value of a London flat is enough to buy a house in the North
Experts say huge bonuses paid to bankers are contributing to growing North-South divide. Prices of homes in Kensington and Chelsea rose by nearly 12.5 per cent. The average home in the exclusive London neighbourhood is now more than 1million.
The average price for a home in the North East - the cheapest area in the country- is 99,294. House prices in Britain's most exclusive neighbourhood have soared by a record breaking 120,000 in the past year while values have stalled or fallen in most of the country.
It means homeowners in Kensington and Chelsea, West London, saw the worth of their propertiesrise by enough to pay for an entire house in many UK regions.
And some experts say one of the main factors fuelling the ever-growing North-South divide is the huge bonuses paid to bankers and other City workers. Figures released by the Land Registry yesterday revealed that the price of the average home in Kensington and Chelsea rose by nearly 12.5 per cent, 118,754 over th past year, more than a full-time worker on the national average of 26,462 earns in four and a half years.
As a result, the average home in Kensington and Chelsea costs 1.08 million, the only part of Britain where the average price is over 1million. By comparison, the average home in the North East, the cheapest area of the country, is 99,294, and in the North West it is 106,527. The yearly rise in values in the upmarket London borough, a favourite location for foreign billionaires, could also buy a home in Wales, where the average price is 116,545, or Yorkshire and the Humber, where it is 114,669.
The figures highlight the extraordinary gulf between the cost of buying in London and property values in the rest of the country.
Prices in the capital went up by 7.1 per cent over the year and by 2.5 per cent in January alone, taking the average to 373,207.
In the month of November last year, more than 430 homes in London were bought for over 1million.
Prices in the North West showed the biggest decline, falling 4.2 per cent over the year and 1.9 per cent in January. Over all, house prices rose by one per cent in January to an avaerage of 162,441 in England and Wales.
Peter Rollings, chief executive of estate agency Marsh & Parsons, said: "These figures confirm what we have ben saying for some time. London is a unique market within the UK."
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "There is an extraordinary difference between the housing market in London and the rest of the country.
While areas such as Kensington and Chelsea storm ahead, house prices in the North of England are in reverse as the gap between North and South grows ever wider."
Estate agency Savills said yesterday that the soaring cost of London propertie has been fuelled by bonuses paid to City workers over the past decade.
Since 2003, it said, around 23billion in bonus money from finance and insurance workers has been ploughed into prime homes in the capital.
A furhter 14billion has been used to buy homes in commuter areas such as Elmbridge, Reigate, St Albans and Sevenoaks.
The Savills report said more than 50 per cent of buyers in prime areas of central London work in the financial and business sector.
Despite the economic downturn, bonuses continue to be paid, causing prices to rise to levels other workers cannot afford.
Lucian Cook, director of residential research at Savills, said: "We estimate that some 3billion of bonus money was injected into prime London and South East markets in 2012".
Over the past decade, just in Kensington and Chelsea 4billion of bonus windfalls has been used to buy a home, a second home or a buy-to-let property, he estimates.