Restricted lending's regional effect on house prices?

blunt_crayon

before i say anything i'd like to point out that i don't know much about house prices etc! i was just reading the thread on 100% mortgages and it made me start wondering about this.

assuming that mortgage lending remains restricted to, say, max 90% LTV,will it take longer for the housing market to 'pick up' in areas where prices are higher? let's say a 2-bed house in Leeds costs £100k and a similar house in Brighton costs £200k. FTBs need to save 10% deposit, in the north that would be 10k, but in the south 20k. assuming income is the same in each area (i know they generally aren't but this is hypothetical), it would take the FTBs in the south twice as long to save their deposit, so the HPC would be more protracted in the south.

or, on this basis, would prices drop further in the south until the 10% deposit became more affordable, say 15k?

simple2rent

Regional prices are a factor of demand, if people earn more in one region (e.g. London) then they are usually willing to pay more for their property.

I think employment levels will be a big factor in house price recovery - other than being able to get a mortgage.

So to go back to your point, there will be regional variations in prices due to regional differences in the economy / employment. But also to note that a 10% fall in the Leeds house (£100K) is £10k, but the same 10% fall in the Brighton house (£200K) is £20K ... if both drop by the same percentage then in actual money terms the one in Bright loses more.

blunt_crayon

but is the massive disparity between prices in some areas partly down to the silly lending that went on? overall average salaries aren't that different between regions - certainly not double:

"Median full-time weekly earnings in London were £613, significantly higher than in other regions, where they ranged from £418 in Northern Ireland to £500 in the South East." (http://www.statistics.gov.uk/cci/nugget.asp?id=285)