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Gleeson’s bullish update the latest sign that northern property market is catching up with south

Investors and private buyers are driving up demand in places like Leeds and Manchester as they start to venture outside of London
new homes
There’s still a huge difference in prices though

Affordable housebuilder MJ Gleeson (LON:GLE) updated investors on its full-year performance this morning, and you’ll be hard pushed to find a more bullish trading statement.

The northern England-focused firm said demand for its houses has been so strong that potential buyers have literally been queuing round the block to view its various sites.

Gleeson sold 1,013 homes during the year to June, up 12.1%, while reservations during the last six months soared by almost 50%.

Demand for northern properties soaring

On a wider note, Gleeson’s post-Brexit recovery is indicative of something which for the past decade or so would’ve been unthinkable: the northern property market is giving the south a run for its money.

You only have to look at the recent Nationwide house price index, which showed that growth in the south-east and London continued to slow in the seconds quarter compared to the rest of the country.

House price growth in the capital moderated to just 1.2% – the weakest pace of growth in five years. That figure was bettered by almost every other region in the country, with the North West and the midlands seeing particularly strong growth in house prices.

Northern Powerhouse initiative paying off

The government’s decision at the start of this decade to invest more in regions north of London is no doubt playing a part in the growing interest from home and abroad in homes in places like Manchester and Leeds.

The HS2 and HS3 high-speed rail lines are a big part of this and are expected to narrow the north-south divide by encouraging businesses to base themselves outside of London, which should in turn drive economic prosperity and growth.

Berkeley bemoans ‘dampened’ demand in London

In its final results last month, London-focused housebuilder Berkeley Group Holdings PLC (LON:BKG) spoke of ‘dampened’ demand, and cited political and economic uncertainties as one of the main reasons.

Compare that with Gleeson’s update this morning, which read: “Gleeson Homes begins the current financial year in its strongest ever position, demand remains strong as is evidenced by the queues forming at site openings and reservations are at record levels.”

Persimmon PLC (LON:PSN) was a little more upbeat than Berkeley however, reassuring investors that demand is still good despite the hoo-ha surrounding Brexit and the snap election.

It said it sold 8% more homes in the past six months compared with the first half of 2016.

Demand might be growing, but prices up north still lagging

While demand for properties ‘up north’ is rising as homebuyers and investors venture outside of London and the south east to snap up properties, the gap in prices is still pretty startling.

Even with the recent shift towards the ‘Northern Powerhouse’, the divide in average selling prices is very much still there. Nationwide estimated last month that the average selling price in London is £478,000 compared with just £125,000 further north.

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