The new North South divide: House costs leap in cheaper areas as London and commuter belt wrestle

House prices rose in the north by close to 5 per cent last year, while values in London fell by 1 per cent, official figures revealed today. 

In England, prices rose by 4.6 per cent across the North East in the 12 months to December, according to Land Registry data released today by the Office for National Statistics (ONS).

It also showed prices in the North West rose by 4.5 per cent last year while in London prices fell by 1 per cent.

The average home in the capital is now worth £551,294 compared to £165,257 in the North East and £217,428 in the North West.

However, it was a poor end to the year for homeowners in general. Every English region bar the East Midlands saw the average price paid for a property fall in the month of December. 

Prices fell by 0.7 per cent in the final month of 2025, meaning the average property was worth £270,000 in December, 2.5 per cent higher than a year before.

Two-tier market: House prices rose last year in the north but either fell or remained flat across London and the south

It means that overall, the typical UK home rose in value by an estimated £6,000 last year. 

Due to the length of time it takes for house sales to be registered with the Land Registry, these are just estimates that are still subject to change over the coming months as more data becomes available.

The data that is available shows big differences across other regions of Britain as well as different types of properties.

In Wales prices are up 5 per cent year-on-year and in Scotland the average home is 4.9 per cent higher than it was a year ago. 

Again, property prices in both regions are relatively affordable. In Wales the typical home is worth £214,883 and in Scotland it’s £190,649.

In more expensive parts of the country, prices came under pressure last year. 

In the south of England, prices are virtually flat, with values in the South East unchanged and prices in the South West down 0.3 per cent year-on-year.

The average home in the South East is £378,800 while in the South West it’s £301,226. 

‘This is due to the conjunction of two factors, according to Jonathan Hopper, chief executive of buying agents Garrington Property Finders. 

‘Too much supply and not enough demand. With plenty of homes for sale, buyers in the south could afford to be choosy, take their time and drive hard bargains,’ said Hopper.

‘London’s softer performance is also the product of stretched affordability, higher borrowing costs and more cautious sentiment at the upper end of the market. 

‘The capital’s more pressured labour market adds another headwind, but it is part of a broader picture rather than the sole cause. 

He added: ‘For much of the past decade, the South pulled ahead almost by default. What we are seeing now is a rebalancing, with demand holding up well in northern England and the devolved nations thanks to attractive relative value and stronger local economies that help buyers feel secure enough to commit to a purchase.’

The type of property someone lives in also matters. Those in semi-detached houses have seen their homes rise in value by 3.9 per cent on average while those in flats have seen values fall by 0.5 per cent. 

Richard Donnell, executive director at Zoopla is not expecting house prices to begin shooting up anytime soon and expects the north-south divide to continue.

He said: ‘House price growth has slowed across the country with the weakest growth being reported across England with prices falling across London and flat across southern England. 

‘There are more homes for sale than a year ago across southern England, which is boosting choice for buyers, keeping house price growth in check alongside greater affordability pressures from higher house prices. 

‘There is more scope for prices to increase away from southern England, where homes are more affordable and there are 3-5 per cent fewer homes for sale than last year. 

‘Our latest data shows a rebound in demand for home but running 8 per cent below this time last year which points to a continued slowdown in price growth over 2026.’