Even more apparent over recent months is the two-tier nature of the British housing market. In London, house prices have been rising, whereas in the North, West and in Northern Ireland prices have been falling.
According to Rightmove, a property website, asking prices in London jumped by 2.5% this month, just below the record achieved last October. HBOS reported a 3% increase in London house prices in the final quarter of last year. In many areas of the British capital, the supply of homes coming onto the market is declining, whereas demand is high despite widespread economic and financial uncertainty. London is definitely being assisted by an influx of foreign capital from Europe at a time when there are genuine fears over the long-term security of the euro. In times of real uncertainty, London often appeals to the wealthy as a safe and secure place. Also, London property is usually quite liquid.
Elsewhere, the picture is very different, as fiscal austerity and public sector cutbacks weigh on demand. In Scotland and Northern Ireland, prices collapsed by 8% and 7% respectively in Q4, according to HBOS, while in Yorkshire prices were down by nearly 6%.
In 2012, this divergence in property prices between London and the rest of the UK will only widen further.