Gaping North-South divide over repossessions
Tuesday 26th June 2012
A gaping North-South divide has emerged in housing repossessions, with northern regions seeing a higher number than in the Southern, according to research by e.surv chartered surveyors.
e.surv’s analysis of court-ordered repossessions in the second half of 2011 found the highest number in the North-East and the M62 corridor. Borrowers in the North – particularly in urban areas dependent on public sector employment and with lower levels of affluence – have found it harder to keep up with mortgage payments.
Richard Sexton, business development director of e.surv, said: “Banks are playing a vital role in keeping people in their homes. They’ve been increasingly forbearing to borrowers with mortgages in arrears, and this has kept repossessions levels deflated.”
But he warned: “It can’t last forever. The pace of public sector austerity is quickening, and the economy has ground to a standstill. This will push up unemployment and pillage personal finances, forcing more people into mortgage arrears.
“On top of that, the cost of funding mortgages is increasing for banks. Their balance sheets are being stretched to busting point by the eurozone crisis, which will mean they simply can’t afford to support as many struggling borrowers.
“With the North more exposed to the grind of public sector austerity and a downturn in the economy, the North-South divide in repossessions levels could become even starker over the coming months.”
Repossessions in the North-East were significantly higher than the national average of 15 per 10,000 households: in Darlington and Durham, the average was 24 repossessions per 10,000 households. Similarly, the M62 corridor, which includes industrial Lancashire and parts of southern Yorkshire like Bradford and Doncaster, has more repossessions than the national average.
Chester was the worst affected, with 53 court-ordered repossessions per 10,000 households, followed by Oldham (27) and Durham (26).
Repossessions were significantly lower than the national average in the Home Counties and the South-West. They were low across the Cotswolds, the West Midlands, the West Country and the southern coast of England. Oxfordshire saw only 12 repossessions per 10,000 households.
Eight of the ten postcode areas with the lowest number were in the South, although there was only a single repossession in Galashiels, Northumberland, per 10,000 households. The City of London, had only three per 10,000 households. Conversely, seven of the ten postcode areas with the highest number of repossessions were in the North.
There are two notable exceptions to the North-South trend. First are areas populated by a high number of wealthy retirees. These ‘affluent grey’ areas tend to have lower numbers of repossessions. In Herefordshire, which has eight times the national average of affluent greys, repossessions are 20% lower than the national average. The same effect is seen in Harrogate, north Yorkshire, which had only 11 repossessions per 10,000 households, despite it being surrounded by areas where repossessions were significantly above the national average.
The second exception is parts of east London, parts of Essex and Kent, and south Wales, where their local economies have fared poorly compared to the regional economy. Repossessions in Romford and Dagenham were 87% higher than the national average, while in the Medway area of Kent they were 60% higher. In the Cardiff area, repossessions were 73% higher than the national average.
Sexton commented: “Repossession levels can vary wildly, even within a confined geographical space, thanks to local disparities in affluence and employment rates. Particularly in larger cities, there can be pockets of wealthy borrowers close to council estates.
“We’re seeing a broader trend of less affluent, higher-risk borrowers gravitating towards the city centre, with wealthy home owners moving into the leafy suburbs.
“London is a slightly different beast. It is the most pronounced example of how repossessions can vary locally. It has wealthy enclaves like the City and Canary Wharf on the doorstep of poorer areas like Tower Hamlets and Dagenham.”
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