Despite recent reports of the UK’s property price divide going into reverse, government economics advisor, Professor Michael Ball shows strong evidence that the future of the market will see house prices of the north and south of the United Kingdom distend even further.

Speaking at the recent annual conference of movewithus, the property network, Prof. Ball warned industry professionals against knee-jerk reactions based upon short-term market predictions.

Over the past year, prices in some parts of the North have risen as steeply as they ever did during the long years of boom in the South. Hometrack’s figures are echoed by the Land Registry, which last year recorded rises of 30 per cent in North Yorkshire and the East Riding, 21 per cent in Greater Manchester and 20 per cent in Northumberland and Lancashire.

Is there any wonder, comments Prof. Ball, that reports have been talking of a reversal of the traditional South rich North poor divide? There is however, no guarantee that this reversal will last. European investment in Northern towns, cities, their transport and communication links has enhanced many areas of the North. The Commonwealth games in Manchester and the decision to make Liverpool the European Capital of Culture 2008 have and will continue to lift the identity and value in the North.

But, says Prof. Ball, Prices in the Midlands and the North are declining, relative to Southern England on a long-term basis.

Reading the current month-by-month figures, you could be forgiven for panic selling in the South and getting in on the action above the imaginary Severn-Wash divide. Before you make your decisions consider some factors. Prices in the Midlands and the North are declining, relative to Southern England on a long-term basis.

Regional housing markets tend to fluctuate because of local economic factors. This is the reason why these regions of the Midlands, North of England and Scotland have experienced what some people call the 'ripple effect.’

The nature of their economies is such that they tend to lag behind the overall business cycle whereas the London and Southern England economy leads the general economic business cycle. This is mainly driven by the fact that financial services and those sorts of industries have been extremely prevalent in London and not so important in other areas. It is therefore the economic cycle that creates the house price cycle, not a sentiment driven ‘ripple effect’ as is often discussed in the dining rooms of Islington and the boardrooms of newspapers, argues Ball.

Furthermore, demand for housing in southern England is going to grow stronger because of two key demographic pressures. The first is migration; international labour markets are very mobile.

During the 1990s the countries that attracted the most migration to the UK were the United States and France. Many people are moving into Southern England often on a temporary basis for 5 – 10 years to take up very well paid jobs in our various industrial sectors. These sorts of demographic changes will have huge impacts on housing markets.

Similarly movements of population from the regions to the south east in search for higher wages are important in the medium term, creating demand and pushing up prices

Secondly, demand will continue to rise due to the growth in household numbers. The population is not increasing much but households are.

The number of traditionally married couples with 2.5 children is also declining. This is partially matched by the increase in co-habiting couples but even co-habiting and married couples when taken together are in decline.

Particularly in the south east, where career is more likely to take priority over starting a family, there will be a very strong growth in one-person households and these sorts of demographic changes will have huge impacts on housing markets.

There is no doubt that the traditional North South divide has experienced a shake up and the house prices of some areas in the North may have dramatically and rapidly increased. However, the long-term view of the market indicates continued regional and international migration, geographically entrenched employment and wage increases that will drive housing demand.

Property prices in the South will increase, extending the gap between real estate value in the North and the South.

The movewithus Property Relocation Network was formed in 1997. Based in St Ives Cambridgeshire, the network has an increasing membership of partner estate agents throughout the UK and overseas currently with in excess of 600 members. Further information can be found by logging on at www.movewithus.co.uk