North West once again posts the strongest house price growth

The North West continues to lead the way as buyer demand pushes up prices faster than anywhere else in England, with more growth forecast thanks to continuing regeneration.

House prices in the North West have continued to climb at a faster rate than the rest of England, according to the latest report published by Zoopla. In the year to October, the region posted house price growth of 2.9%, compared with an average of 1.5%.

The only UK-wide location to have surpassed the North West in terms of price growth was Northern Ireland, where values soared by 6.3%.

The price hikes in the region were led by the likes of Oldham, which saw an increase of 3.7%, and Wigan, with growth of 3.9%. Looking specifically at cities, Manchester remains the top-performing city in England, where prices climbed by 3.1% between October 2023 and October 2024.

The region, and the city of Manchester, have consistently been at the top of the pack when it comes to the strength of their housing markets, representing part of an ongoing north-south divide, with the south of England registering price growth of less than 1% on average.

This is partly down to affordability factors, as rising mortgage rates, inflation and the cost of living crisis have reduced spending power in many parts of the more expensive south. Meanwhile, places like the North West, where prices remain below the national average, have seen rising appetite from home-buyers, property investors and tenants.

Greater affordability in cheaper areas

The mortgage market also plays a major role when it comes to housing market performance across the various regions. Over the past two years, the sector has been getting used to the new ‘normal’ of higher interest rates, and this includes adapting by taking out less borrowing.

Where property prices are cheaper, the market is generally less affected by higher mortgage rates, as lower levels of borrowing are needed; while in expensive areas, some would-be buyers might be put off by the additional mortgage costs. Some of these buyers could be pushed to relocate to cheaper areas, which pushes up prices at a faster rate in these locations.

Zoopla uses a model to track whether homes are under or overvalued, as this can impact how quickly prices are set to rise – overvalued areas tend to stagnate, whereas those that are perceived to be better value can see faster growth.

It notes that during the 2007 financial crisis, house prices were more than 40% ‘overvalued’, before they fell sharply in 2008/2009. On a smaller scales, homes were 16% ‘overvalued’ after mortgage rate rises in 2022/2023, causing slower growth.

Zoopla adds: “Looking forward, we expect UK house prices to remain undervalued over 2025. This assumes an average mortgage rate of 4.25%, house prices rising by 2.5% and income growth of 4.6%. In the 3 years to the end of 2027, we expect house prices to grow by 7.5% in total.”

North West offers fair value

Along the same lines, places like the North West, along with the rest of the north, Midlands, Scotland and Wales, are currently ‘fairly valued’, says Zoopla, meaning that price rises are expected to continue along the same trajectory.

However, prices in many parts of the south appear to be ‘overvalued’ by 30% or more, which is based on the average income in those areas.

In separate research from Savills, the North West is forecast to see 5% house price growth over the course of 2025, along with the North East, Yorkshire and the Humber and Scotland.

Over the course of the next five years, the region could see property price gains of a cumulative 29.4%, which is the highest rate of growth of any region in England.

Places like Manchester and Liverpool have already been through huge regeneration and redevelopment, including transport and infrastructure improvements, bringing new housing, shops and other commercial offerings. This has also spread to the surrounding area, with area like Stockport now seeing a huge amount of investment.