More than two-fifths of London postcodes registered year-on-year house price falls last month with central areas suffering the worst falls, while some of the country’s regional cities have seen more than 7% growth.
Hometrack has released its latest UK Cities House Price Index which shows how far certain parts of London are falling behind some of the stronger performing parts of the UK, after house price growth rates in the capital fell to just 1% – down from 4.3% a year ago.
The worst hit parts of the capital are the City of London with a 7.9% annual house price growth rate fall, Camden with 1.9%, Southwark with 1.8%, and Islington with 1.4% – all of which are prime central areas with some of the highest house prices.
Affordability pressures in London
However, the majority (58%) of local authorities in London have seen positive growth over the past year, albeit below the UK national average, with Mole Valley topping the list with 3% growth rates, followed by Gravesham (2.9%), Redbridge (2.5%), Waltham Forest (1.9%) and Barking and Dagenham (1.7%). In such outer London areas, sellers can expect their homes to be on the market for around half the time compared to inner London, where it now takes around 18 weeks to sell.
Hometrack expects that London as a whole will see negative price growth by the middle of this year.
Richard Donnell, insight director at Hometrack, said: “The weakness in London’s housing market has been building since 2015 on the back of numerous tax changes aimed at overseas and UK investors and growing affordability pressures facing homeowners. Sales volumes are first to be hit when demand weakens and housing turnover across London is down 17% since 2014. Sales prices are next to follow but with few forced sellers the level of price falls remains low.”
Which parts of the UK came out on top?
Edinburgh, Liverpool, Birmingham, Leicester and Manchester all saw the strongest year-on-year growth, registering more than 7% between February 2017 and February 2018, according to the index. Across UK cities as a whole, house price inflation reached 5.2% annually.
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In Edinburgh, where average house prices are now £277,300, property price growth surged by 8% over the 12-month period, up from 4.4% the previous year. This was followed by Liverpool, which saw house price growth rise to 7.8% in the year to February compared to 2.7% in the previous period, bringing the average value up to £115,700. Birmingham and Leicester both registered 7.7% house price growth, while Manchester saw a 7.1% rise.
Donnell added: “Away from southern England, house price growth remains robust in regional cities where prices have registered lower overall growth since 2009 and affordability levels are in line with their long run average.”
Property investors looking at house price trends across the UK have already begun to diversify towards regions of the north and Midlands in the search for higher yields and better capital gains from their investments.
