Regional cities continue to drive headline house price growth while in London there are signs that the downward pressure on prices is starting to ease on a seasonal increase in activity.
The annual rate of growth ranges from +8.1% in Edinburgh to -6.6% in Aberdeen with Cambridge the only other city registering nominal price falls (-1.2%).
Cardiff, Leeds, Newcastle and Sheffield have all recorded a sustained upward shift in the annual rate of growth over the last 12 months. Capital growth in these cities has under-performed that recorded across the larger regional cities over the last two years. The increased rate of growth is a result of rising demand and a lack of housing for sale.
Analysis of property listings data from Zoopla reveals the usual, seasonal increase in housing sales being agreed over the first three and a half months of the year. This is across all cities, including London where early indications suggest the uplift in sales appears slightly higher than last year.
Alongside sales, the supply of homes for sale has also been increasing. In cities where house price growth is above average we find that new supply is broadly in line with sales. The ratio of sales to new supply is around 1 to 1.1x in Manchester, Birmingham, Edinburgh and Glasgow. This creates scarcity and, together with attractive affordability levels, supports above average capital growth.
Russell Quirk, founder and CEO of Emoov.co.uk, commented: "City living often comes at a premium and so an increase in the number of sales agreed across all UK cities is a strong indicator of the stabilising health of the market and a returning level of both buyer and seller interest.
London has seen the most sustained decline of all UK cities so the early signs that downward price pressure is subsiding will be very welcome.
While London buyers may still be waking from their Brexit hibernation, there has been an influx of stock coming onto the market and this sign of confidence from sellers in the capital should soon filter through to the buyer side of the market.
When it does, the London market should start to find its feet again and continue to build momentum throughout the rest of the year."
Ged McPartlin, director at Ascend Properties, had this to say: “Once again Manchester hits the headlines with 7.4% year-on-year growth however, whilst the report indicates that supply is keeping up with demand, this is not reflective of the current market, particularly in the city centre. There is no mistaking the fact that Manchester has a healthy pipeline with thousands of units due to be delivered over the next 5 years, but the shortage of stock right now is very prevalent and has led to a competitive sales market indeed.”
Liverpool is a similar scenario although the demand is mainly driven from investors due to the high level of rental accommodation needed. Rental yields here are incredibly healthy and providing there is stock available at the right price, properties don’t tend to sit on the market for long.”
Graham Davidson, managing director of Sequre Property Investment, comments: “Once again, the northern cities are driving house price growth with healthy year-on-year price increases in Manchester, Leeds and Liverpool. Whilst the report seems to demonstrate that supply is broadly in-line with sales, there are still many barriers to home ownership which results in a firm reliance on the private rented sector.
Investors who chose these key northern cities for buy to let several years ago will be enjoying a significant amount of capital growth already, but there is still a fair way to go, particularly when some of these areas are predicted to rise over 22.8% over the next 5 years.
With the total UK house price inflation up 3.7% from 12 months ago, this simply demonstrates the health of the property market right now. Demand remains high, particularly in city centre locations and developers continue to have confidence to plough on with ambitious projects. For investors looking for high yields and significant capital growth, now is the time to invest in these key northern cities.”
