Contrary to some reports suggesting London’s housing market may be recovering, new data from Hometrack reveals the capital’s performance is still slowing with price growth at its lowest level since 2013.
Hometrack says that for its monthly analysis of a basket of 20 cities across the UK, annual house price inflation is running at 6.4 per cent – this is down from 7.8 per cent a year ago.
The consultancy claims that affordability pressures continue to bite in high value cities in southern England. In particular this is shown in London where the rate of annual increases – 5.6 per cent – is at its lowest since 2013. By contrast, Manchester is registering the highest rate of growth at 8.8 per cent.
In recent years turnover has been flat or falling in the highest value, least affordable cities such as London and Bristol, due to weaker investor demand, the impact of the Brexit vote on buyer sentiment and stretched affordability levels.
Sales levels in these cities peaked in 2014/2015 and in London overall sales volumes are now down eight per cent since 2015.
Hometrack says that were it not for the surge in investors in the first quarter of last year, ahead of the introduction of the stamp duty surcharge, the falls in volumes would have been greater.
Meanwhile Manchester and other regional cities such as Liverpool, Leicester and Birmingham have recorded significant surges in transaction volumes of between 30 per cent and 40 per cent or even more over the past three years as buyers return to the market supported by an improving jobs market and record low mortgage rates.
“Levels of housing turnover across UK cities are expected to remain broadly flat over 2017. There is some further upside for sales volume in regional cities but much depends upon how would be buyers respond to external factors, not least the impact of lower real wage growth, the potential for higher mortgage rates and whether demand will be impacted by the triggering of Article 50 at the end of the month” says Richard Donnell, Insight Director at Hometrack.
“There remains huge uncertainty over what this means for the economy over the next two to three years and beyond. In cities where affordability remains attractive we expect demand to hold up in the short term albeit with slower growth in sales volumes” he adds.