The latest house price indices reveal regions and cities in the north of England are leading UK house price growth. And this will likely continue in the coming years.
In recent years, the north’s property markets have performed strongly, remaining particularly resilient through economic and political uncertainty. This has continued to be the case throughout the COVID-19 pandemic as well. And it is expected to remain that way in the coming years.
According to HM Land Registry’s House Price Index for January, the average annual house price for a property in the UK increased by 7.5%. This led the average UK property price to come in at £249,309.
With a regional outlook, the north-west of England has led the way with a 12% annual rise in house prices. Wales racked up a 9.6% annual rise. Yorkshire and the Humber and the north-east followed with 8.9% and 8.5% increases respectively. On the other hand, London only saw 5.3% growth in house prices. And the south-east and south-west saw 6.4% and 6.7% rises.
Northern cities are seeing the strongest growth
Zoopla’s House Price Index for February revealed which UK cities are leading annual house price growth. Northern cities dominate the top of the list, and the north-west is well represented with the top two spots.
Manchester comes out in first with a 6.6% year-on-year house price increase, while Liverpool is close behind with a 6.4% rise. Leeds comes in at third with 5.4% growth, while London saw annual house price growth increase by only 2.2%.
Interestingly, the cities seeing the strongest house price growth are still home to property prices well below the UK average. Nine of the top 10 cities in terms of house price rises have average property prices under £200,000.
Additionally, according to Zoopla, more than two-thirds of homes currently on the market in the north are listed for less than £250,000. This means buyers in the north are in good position to benefit from the tapered extension to the stamp duty holiday. From 1st July to 30th September, the nil-rate band is in place for properties worth up to £250,000.
The north will likely continue leading the way
Recently, estate agency Savills published its UK housing market predictions for the next five years. The estate agent forecasts house price growth will be strong in areas outside of the capital in the coming years. This will especially be in markets home to lower house price to household income ratios. This leaves more room for house price rises.
Savills forecasts the north-west of England and Yorkshire and the Humber will lead house price growth in 2022 with 6% rises and 2023 with 5.5% increases. The north-west is then forecast to shoot slightly ahead with 5.5% house price growth in 2024. And the two regions are back tied again with 4.5% growth in 2025.
With these projections, Savills forecasts the north-west to lead house price growth in the five years to 2025 with a whopping 28.8% increase. Yorkshire and the Humber is to follow with a 28.2% increase. During this period, UK house prices are expected to rise by 21.1%, while London prices are forecast to increase the least with only 12.6% growth.
In the coming years, more investment and development are coming to towns and cities in the north. This will likely further boost demand in the property market and push house prices up. The north-south divide in terms of house price growth is expected to continue to widen, which could even out the house price gap between the north and south.