Mind the gap: implications of overseas investment for regional house price divergence in Britain

The UK has had a long-standing regional house price gap with prices in London much higher than the rest of the UK. Using price data from 1969 to 2016 we track price differentials through several cycles of boom and bust, and note the growing divergence of London, particularly central London, from the rest of Britain. In explaining this divergence, we highlight the growing importance of international investment since the global financial crisis. We conclude that, although ‘Brexit’ may have brought the latest long London boom to a close, there is nothing to suggest that the regional house price gap will close. Given the ongoing importance of global financial inflows to major world cities, this has significant implications for how governments approach affordability and housing policy