House prices set to increase up to 7% next year despite Brexit uncertainty and income squeeze

Continued robust growth in large and vibrant regional cities such as Birmingham, Manchester and Leeds is behind the raised expectations

Vicky Shaw
Friday 21 July 2017 00:01
Comments
Record low mortgage rates and falling unemployment are generally continuing to help support price growth
Record low mortgage rates and falling unemployment are generally continuing to help support price growth

House price growth across the UK’s biggest cities is set to be stronger this year than previously predicted, according to an index.

Values across the 20 biggest cities are now expected by property analysts Hometrack to increase by 6 per cent to 7 per cent over the course of 2017, higher than its previous prediction of 4 per cent made in December 2016.

Continued robust house price growth in large and vibrant regional cities, such as Birmingham, Manchester and Leeds, despite uncertainty over Brexit, is behind the raised expectations.

While annual house price growth in London has slowed to 2.6 per cent, its lowest level in over five years, Birmingham is now the fastest-growing major city for house prices, with a 7.8 per cent annual increase.

Hometrack expects growth to continue over the remainder of 2017 as prices are rising off a lower base.

The average price of a property in Birmingham, at £154,900, is less than a third of that in London, at £492,700.

Other large regional cities outside the South of England, such as Manchester and Leeds, continue to register consistent and robust house price growth, supported by the same economic factors that are driving growth in Birmingham, Hometrack said.

Like London, Bristol, Oxford and Cambridge have all seen a marked slowdown in the rate of house price growth over the past 12 months.

Record low mortgage rates and falling unemployment are generally continuing to help support price growth, Hometrack added.

Richard Donnell, research and insight director at Hometrack, said: “Despite a material slowdown in the rate of house price growth in South Eastern England, the headline rate of city house price inflation is holding up, despite the squeeze on real incomes and uncertainty around Brexit.”

He said in London, the Brexit vote appears to have had a greater impact on buyer sentiment, and, combined with affordability issues, has led to a slowdown in the annual growth rate over the last 12 months.

He continued: “However, although house price inflation has fallen sharply in the capital, it is starting to flatten out and the rate of growth is likely to avoid year-on-year price falls in the coming months.”

Here are average house prices in the UK’s 20 major cities in June and the year-on-year change, according to Hometrack:

Aberdeen, £184,300, minus 2.7%

Belfast, £130,600, 4.3%

Birmingham, £154,900, 7.8%

Bournemouth, £280,400, 5.2%

Bristol, £270,900, 5.6%

Cambridge, £425,500, 1.9%

Cardiff, £195,800, 4%

Edinburgh, £211,100, 6.5%

Glasgow, £117,700, 3.3%

Leeds, £161,400, 5.4%

Leicester, £164,500, 5.8%

Liverpool, £118,300, 4.8%

London, £492,700, 2.6%

Manchester, £155,700, 6.4%

Newcastle, £126,600, 2.4%

Nottingham, £146,000, 6%

Oxford, £424,800, 2.1%

Portsmouth, £229,700, 5.6%

Sheffield, £133,700, 4.7%

Southampton, £228,100, 5.7%

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