North-South house price gap ‘could narrow in 2017’
The gaping North-South gap in UK property prices could begin to narrow during 2017 as buyers eye more affordable cities outside London and SE England, according to the latest Hometrack UK Cities House Price Index.
20 January 2017
The index, which records price movements across the nation's 20 largest conurbations, found that cities in the West Country, NW England and the Midlands all recorded higher price growth – although from a much lower base – than London over the course of last year.Prices in Bristol increased faster than any other UK city in 2016, jumping 9.6 per cent to average £261,000 by year's end. By comparison, London saw property rises of 'only' 7.3 per cent, its lowest rate for more than three years, although the average price there still stood at almost £485,000 in December, according to Hometrack's calculation.Richard Donnell, insight director at Hometrack, said, “2017 looks set to be a year when the North-South divide for house prices might finally start to narrow once again.“This latest UK city house price index reveals how the impetus for house price growth is shifting to more affordable cities where the recovery in house prices has been more muted in recent years.“In Manchester, the underlying market conditions remain strong, with the supply of homes for sale only just managing to keep pace with demand. This is keeping the upward pressure on house prices.“A similar picture is emerging in other regional cities such as Birmingham and points to continued, above average price inflation in regional cities over the next 12 months.”
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Manchester recorded the second highest growth in 2016, with prices increasing of 8.9 per cent, representing the fastest annual rate for the city since July 2005 although the average home price there remained less than a third that in London.But Hometrack said that a home in London now equated to about 14 times earnings, suggesting there would be “a prolonged period of price re-adjustment in the London housing market over the coming years.” In cities such as Manchester and Birmingham, homes currently cost about six times the average local wage.Aberdeen was the only city in the index where prices fell over the course of last year, but Hometrack said the speed of the annual decrease had slowed with prices recording “something of a revival” in the final quarter of 2016, perhaps reflecting the improvement in the global oil industry's fortunes.Coinciding with publication of the Hometrack index was a report from the National Landlords' Association which said that landlords were becoming increasingly likely to buy properties in northern England because they represented better value than comparable properties in SE England.However, a separate index published by Nationwide Building Society earlier this month found the gap between house prices in northern and southern England had widened by around £11,500 over the past year and now stood at more than £170,000.The average house price across northern England and the Midlands was £156,211, according to Nationwide, while the average in southern England was £326,554.
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Manchester recorded the second highest growth in 2016, with prices increasing of 8.9 per cent, representing the fastest annual rate for the city since July 2005 although the average home price there remained less than a third that in London.But Hometrack said that a home in London now equated to about 14 times earnings, suggesting there would be “a prolonged period of price re-adjustment in the London housing market over the coming years.” In cities such as Manchester and Birmingham, homes currently cost about six times the average local wage.Aberdeen was the only city in the index where prices fell over the course of last year, but Hometrack said the speed of the annual decrease had slowed with prices recording “something of a revival” in the final quarter of 2016, perhaps reflecting the improvement in the global oil industry's fortunes.Coinciding with publication of the Hometrack index was a report from the National Landlords' Association which said that landlords were becoming increasingly likely to buy properties in northern England because they represented better value than comparable properties in SE England.However, a separate index published by Nationwide Building Society earlier this month found the gap between house prices in northern and southern England had widened by around £11,500 over the past year and now stood at more than £170,000.The average house price across northern England and the Midlands was £156,211, according to Nationwide, while the average in southern England was £326,554.
Hometrack UK Cities House Price Index (average December price and annual percentage increase):
- Bristol, £261,600, 9.6%
- Manchester, £151,200, 8.9%
- Oxford, £422,700, 8.1%
- Portsmouth, £222,400, 8%
- Southampton, £221,700, 7.9%
- Birmingham, £147,500, 7.5%
- London, £484,800, 7.3%
- Cardiff, £195,100, 7.2%
- Liverpool, £116,000, 7%
- Nottingham, £139,900, 5.7%
- Bournemouth, £272,100, 5.7%
- Glasgow, £115,100, 4.9%
- Leeds, £153,400, 4.9%
- Sheffield, £128,500, 4.3%
- Leicester, £156,100, 3.8%
- Edinburgh, £202,300, 3.7%
- Newcastle, £123,100, 3%
- Cambridge, £421,000, 2.7%
- Belfast, £124,600, 1.2%
- Aberdeen, £186,500, -3.2%
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