10 Aug 10.08.2018 Manchester: fastest property prices rise in the UK
10.08.2018 Manchester: fastest property prices rise in the UK
As house price growth in London hits a nine-year low, prices in Edinburgh and Manchester are increasing at a faster rate than any other major cities in the UK.
As house prices in regional cities continue to significantly outpace London, the difference in value of homes in these cities is beginning to narrow.
New research from Hometrack underlined Manchester’s status as one of the UK’s strongest investment cities, which could present a huge opportunity for investors over the next three years.
The average home in London is currently worth £491,200, still far higher than the average cost of a house in most other UK cities, but the gap is beginning to narrow. Prices are growing strongly, by 7.1% in Edinburgh and 7% in Manchester, year on year. At the moment a typical home in London is three times more expensive than in Manchester (£163,300); more than twice as expensive as in Edinburgh (£225,300) and four times more expensive than in Liverpool (£118,800).
In London, prices are now falling in over 40% of London’s local authority areas, with the annual rate of growth coming down to 0.4%. In central London, prices are down 4% year on year.
Manchester and Birmingham are expected to be the first cities to move closer to London prices, with demand for housing likely to be boosted by strong job growth. They are forecast to return towards average prices being around half of those in the capital compared to a third today.
Richard Donnell, the insight director at Hometrack, said: “We expect house prices to keep rising across regional cities such as Birmingham, Manchester and Edinburgh over the next two to three years. During this time house price growth in London will remain flat, with annual price rises of approximately 0-2%. As a result, the gap between house prices in cities outside of the south-east and house prices in London will continue to contract.”
Donnell said: “The level of house price inflation seen in large regional cities during the last peak, between 2000 and 2003, gives a good indication of how much prices may rise this time around. If history is to repeat itself and these cities are to get back to where they were, then prices could increase by as much as 20-25%.”
Houses in the capital have become unaffordable for many people after years of surging prices, while wage growth remains meagre and lenders apply tougher mortgage criteria.
According to Hometrack, London is one of five cities – along with Cambridge, Oxford, Belfast and Aberdeen – in the 20 included in its survey where house prices are falling in real terms (adjusted for inflation) because the annual growth rates are below the rate of consumer price inflation of 2.4%.