Cleveland, Blackburn and Blackpool could all have house price bubbles – where house prices have risen but consumer demand has dropped, research from mortgage broker One 77 Mortgages has found.
In Cleveland in the North East of England prices have risen by 11% but annual lending has fallen by 0.9%, suggesting such house price growth cannot be sustained.
In Blackburn and Blackpool meanwhile prices have risen by 6.8% and 6.2% but annual lending has fallen by -0.6% and -1.2%.
Alastair McKee, managing director of One 77 Mortgages, said: “Demand is what drives sentiment and sentiment is what drives prices. But somewhere in the middle people still need to borrow.
“It’s a case of mind the gap for buyers in these areas as lending takes a different trajectory to prices.
“Shrinking mortgage lending sticks out like a sore thumb when you have continued annual house price growth.
“In those areas where the two are headed in different directions, this is likely to be the result of first-time buyers beginning to vote with their feet in the face of steep valuations coupled with smaller budgets thanks to stricter lending criteria.
“If opinions about these stretched valuations are starting to feed through into these borrowing numbers then it’s vital purchasers are even more careful not to end up sitting on unnecessary losses.”
There are 19 areas where a bubble could be developing, the report said, of which just four were in the South of England.
Truro, Torquay, Plymouth and Dorchester were those areas, which have seen an average drop in lending of 0.5% and price increase of 4.2%.
Other areas which could have bubbles are Bolton, Bradford, Liverpool, Harrogate, Darlington, Carlisle, Doncaster, Sheffield, Huddersfield, Sunderland, Hereford and Newcastle upon Tyne,