Price growth in regional UK cities outpacing London, led by Edinburgh
Regional cities are leading house price growth in the UK with Scotland seeing both the highest and the lowest in the 12 months to March 2018.
Prices in Edinburgh increased by 8.1%, and the next highest annual growth was 8% in Nottingham, followed by 7.4% in Manchester, according to the latest index from Hometrack which tracks 20 cities across the nation.
But Scotland also has the biggest fall with prices in Aberdeen down by 6.9% with the only other city in the index seeing a decline being Cambridge with annual price growth down by 1.2%.
Nationwide the average growth is 4.6%, taking the average price to £214,700 and there are signs that downward pressure on prices in London is easing with annul price growth of 1.6% and Hometrack does not expect prices to fall in the capital in the near term.
However, it points out that in London sales are not keeping pace with new supply coming to the market. There are 1.5 homes coming to the market for every sale and the net result is longer sales periods. London has the longest time to sell of all the cities at 17 weeks.
‘Signs of a slight improvement in market conditions in London are not surprising. Falls in asking prices over the last two years, especially in central areas of London, together with deeper discounts from asking to achieved prices and greater realism on the part of sellers appear to be supporting sales rates and reducing the downward pressure on prices,’ the report says.
It explains that the re-pricing of housing in the face of weaker demand and rising supply takes time to work through into sales prices. The process is well established across London with house prices falling in real terms in 40, some 87%, of the 46 local authorities in the London city index.
But it does think that homes in London are overpriced. ‘We expect house prices across London to continue to post modest falls in real terms over the next 12 to 24 months as prices re-align to what buyers are prepared to pay. It is early days, but there are some tentative signs that sales volumes could start to stabilise over 2018 as a result of more realistic pricing,’ the report points out.
The report also points out that Cardiff, Leeds, Newcastle and Sheffield have all recorded a sustained upward shift in the annual rate of growth over the last 12 months, up 5.6%, 7%, 3.9% and 6.1% respectively.
‘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,’ the report says.
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 one to 1.1 times in Manchester, Birmingham, Edinburgh and Glasgow. This creates scarcity and, together with attractive affordability levels, supports above average capital growth,’ the report adds.
The strong growth figures are a sign that the property market is holding up, according to Russell Quirk, chief executive officer of hybrid estate agent Emoov. ‘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,’ he said.
‘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. 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,’ he added.
‘When it does, the London market should start to find its feet again and continue to build momentum throughout the rest of the year,’ he concluded.