Would a Burnham premiership deepen the North-South housing divide?
The UK housing market remained subdued in June, as fallout from the Iran war and long-running cost and regulatory issues continued to plague the sector, but as we enter what promises to be a sizzling summer all eyes are on a possible recovery.
Specifically, Manchester – from where the King in the North has emerged to take the reins from Keir Starmer.
While conversations surrounding a Burnham premiership have mainly focused on the defence spending headache and a potential No 10 in the north, the housing market is also holding its breath over what his leadership could mean.
In particular, the North-South housing rift growing even larger if the Makerfield MP’s blockbuster plans for greater devolution and levelling up are followed through.
According to Nationwide’s latest house price index, property values in the South rose just 0.1 per cent, excluding the capital, in the second financial quarter of the year.
In contrast, the rate of growth in the North West accelerated to 3.9 per cent from 3.3 per cent the prior quarter.
The man anticipated to be the next prime minister could trigger an even greater divide, bouncing Northern house prices even higher, leaving industry figures questioning if Southerners may bear the brunt of that outcome.
South being left behind
In recent years, traditional regional dynamics have shifted, with the north experiencing rapid economic scaling following government ambitions to move public sector jobs and concentrated spending to northern regions.
This shift has boosted local salaries and increased housing demand, with Burnham’s ambitions to create “growth in every postcode” anticipated to further accelerate this.
Jonathan Hopper, chief executive of Garrington Property Finders, said: “There’ll be more people wanting to live there…it will have an uptick effect on what already looks like a sort of north-south divide in terms of the dynamics of the UK housing market.
“The south has been lagging behind the north for well over a year now, and I think this potentially puts more fuel into the northern markets and potentially detracts from the southern markets.”
The southern housing market has hit a wall in terms of pricing, with properties trading eight to 12 times average local earnings, in comparison to the north where prices trade five to eight times average earnings.
This places buyers at the bottom end of the country at an ever greater disadvantage, with significant funds needed to purchase a home, including from generational wealth or multiple high earners.
Hopper said: “The south has burnt bright for many years but arguably burnt itself out on the affordability side…that’s not sustainable in a world where the cost living’s gone up and every other bill that comes through the letter box is higher than it was a couple of years ago.”
Tax reforms
Estate agents and industry figures are also bracing for potential tax reforms which have been floated by Burnham that could cause further problems for the housing market.
Burnham has been a long-term critic of the housing and land wealth tax system, particularly council tax, previously calling it “highly regressive”.
Speculation has grown that Burnham could abolish council tax, alongside stamp duty, and instead introduce an annual proportional property tax set at 0.48 per cent of a home’s current market value.
While some industry figures have said the switch could be an “efficient way to tax a wealthy group”, critics have raised concerns surrounding fairness between the two regions.
Concerns have particularly turned towards “asset-rich, cash-poor” homeowners, who bought a property prior to rising house prices, who may struggle to pay higher bills.
But others have pointed towards Burnham’s tenure as mayor of Greater Manchester where he held a “continued focus on increasing housing supply” particularly through affordable housing and brownfield development.
Nathan Emerson, chief executive of Propertymark, said: “Burnham has consistently supported a more active role for government in addressing the housing crisis, alongside a drive to build more homes.”
Emerson added that a review of stamp duty “with the long-term ambition of abolishing the tax to reduce barriers to moving and support a healthier, more dynamic housing market” would also be welcomed.
The renting sledgehammer
But renters could also find themselves potentially struggling under a land value tax, with the model transferring the liability of property tax from tenants to property owners.
Hopper acknowledged that this could cause a bruising impact on landlords, particularly those in London, who are already facing capped rents following the introduction of the Renters’ Rights Act.
He said: “That would have a sledgehammer effect on southern markets where it’s higher value.
“It could be then another flurry of landlords leaving the market, which will mean less choice for tenants and higher rents in the future.”
Emerson added: “The private rented sector is also likely to remain under scrutiny.
“The key question for the sector is whether further intervention could follow, including rent controls, rent stabilisation policies or expanded local authority powers.