North-South divide starting to narrow

Oct 6 2007 by Adrian Pearson, The Journal

JOBS, wages and house prices in the North are growing faster than the rest of the UK – but the region remains “significantly behind” the South overall.

The mixed message on the North-South divide comes from high street bank Halifax, whose study highlighted impressive growth in the region over the last five years.

The report found that North wages have risen by 22%, while in the South the increase was 18%.

And house prices across the North have risen by 97% over the past five years, almost double the 53% rise in the South.

Despite this, the region still lags behind on earnings, with southern jobs paying on average £31,020 – 21% higher than the north’s £25,642.

Hexham MP Peter Atkinson said the difference in wages was partly caused by the massive growth in London’s financial sector over the last five years.

The Conservative MP said: “We in the North-East have pulled ourselves up by our boot-strings and there is a lot of impressive growth here.

“Yet what we have to remember is that while we have come on a long way, we have done that with a lot of public sector spending, and the Government has done this to the detriment of the private sector.

“The infrastructure in the North-East is a handicap to our private sector growth. And while our quality of life, for example, is very good, the simple things like ensuring good connections through road and rail with the capital are just not good enough.”

A large part of recent public sector spending in the region has come from development agency One NorthEast.

Paul Mooney, One NorthEast’s chief economist, said the results showed the region was moving in the right direction.

He said: “These statistics are very encouraging and confirm that the North-South divide is narrowing. Annual earnings are up, we have more people in employment than ever before, we’re experiencing indigenous business growth and statistics confirm that the region is still punching above its weight in terms of attracting inward investment.

“But we know there is still a lot to be done. The Regional Economic Strategy has identified targets which we hope will make the region greater and more sustainable, and these include creating between 18,000 and 22,000 new businesses and 70,000 new jobs.”

Tim Crawford, group economist at Halifax, said: “There have been encouraging signs that the North-South divide is closing, with larger rises in earnings, employment and house prices in the North over the last five years.

“The North-South divide, however, remains substantial on most key measures of economic activity with average earnings more than 20% higher in the South and house prices 68% higher.”

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Prices rise as demand exceeds supply

HOMEBUYERS in Wansbeck have some of the most affordable homes in the UK to choose from, a new report shows.

The average house in Wansbeck sells for just 2.5 times the average household income.

But families looking to buy a house in Berwick upon Tweed need to be prepared to spend more than five times their average income on a new home.

The figures were collected by market analysts Hometrack, who said the cost of renting a house in England and Wales is now cheaper than the cost of buying it with a mortgage.

Their report found that one in four households are unable to afford to buy their own home due to soaring property prices and rising interest rates. While the problem was less severe in the North-East – with most homes costing three times more than average household earnings – prices are rapidly rising.

Professor Steve Wilcox of York University, who carried out the analysis, said high house prices and rising interest rates were increasingly pricing people out of the market.

A spokesman for the Department for Communities and Local Government said: “These figures show how important it is for councils, communities and house builders to back plans for three million more homes by 2020.

“The long-term rate of house building hasn’t kept up with rising demand, causing long-term house prices to increase.”