Roxana Mohammadian-Molina, Chief Strategy Officer at Blend Network

Parts of the north of the UK may be on the brink of a housing boom

In the four years since the EU referendum, average house prices in the UK's North West have increased 15 times more than those in London.

This trend is likely to accelerate now that the prime minister is pledging to ‘level-up’ the UK economy by investing in parts of the country that for decades have been left unloved.

The British economy has long been characterised by a North/South divide, for a number of reasons, including when it comes to the housing crisis. Therefore, it was not surprising that one of Boris Johnson’s key messages during and after his 2019 election campaign was his vision to reboot and rebalance the economy by ‘levelling up’ the North and unleashing Britain’s potential with a post-Brexit red-tape-cutting bonanza. Back in 2019, he vowed to link the countryside and towns to their regional economic hubs with faster, better transport — a message that’s been amplified by his more recent pledge to ‘build, build, build’. 

We strongly believe that this government strategy will speed up a very interesting trend we have witnessed in the UK housing market, whereby parts of the North, North West, Midlands and Northern Ireland have hugely outperformed the South and South West over the past few years. 

Figure 1: UK regions house price change since Brexit referendum (Q2 2016 = 100)
Source: Nationwide, Blend Network

Figure 1 shows the scale of this disparity. Since 2016, house prices in the South West of England, London and London’s Greater Metropolitan area sharply underperformed when contrasted with the other regions. In the best-performing area, the North West, the average house price increased by 15 times more than average in London.

Furthermore, parts of the North suffer from a major lack of affordable housing. 

These trends provide a unique opportunity for SME property developers as well as alternative finance providers (particularly P2P property lending platforms like Blend Network) which can and must play a key role in helping fund more homes. Alternative finance providers and P2P lenders are more likely to get comfortable with lending in some of those areas that we have seen showing strong performance. 

For example, Blend Network was one of the early lenders in Northern Ireland; in 2018 and 2019, 71% and 13% respectively of the loans we funded were in that market. This strategy played out really well due to the strength of demand there; it meant that our borrowers were able to sell off-plan, often to first-time buyers, and repay us early. 

In summary, I believe a crisis such as the current one doesn’t create new trends, but it has the tendency to accelerate those that are already in place. To me, there is no question that unprecedented opportunities lie ahead, and that property developers and investors alike must stay alert. But, most importantly, they must ensure they are backed by solid lenders who are willing and able to fund their projects the next time that a prospect catches their eye. 

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