The prime housing markets in the East Midlands are largely dependent on demand from wealth generated in the local economy. With the economic recovery, initiated in London and the south east, gaining a strong foothold, we believe that the prime East Midlands housing market should begin to benefit from an improvement in buyer sentiment over the next 12 – 24 months.
While the ripple effect from London has been slow to arrive thus far, we expect the number of buyers moving from London to increase, as they take advantage of the comparatively affordable prices. Since the downturn, the value gap between London and the rest of the country has widened to an all time high.
However, by 2016 we expect the house price growth in the East Midlands to outperform London as the market moves in to the next stage of the cycle.
Although more of an issue in London and the south east, there is a slight threat to top end of the market around the election given that taxation of high value properties is high on the political agenda. Stamp duty has already increased for properties over £2 million and any further changes risks a period of sobriety.
However, our outlook for the prime Midlands and North remains positive with a forecast of 18.1% five year growth.
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