Property markets in the UK’s largest cities showed signs of an autumn recovery, as price growth accelerated and demand proved to be stronger than it had been in the summer, according to the new Cities House Price Index from Zoopla.
The housing market had been bracing for an imminent Brexit in October, but despite the political uncertainty, Zoopla found that sentiment remained bullish, with London enjoying a recovery of its own, after slow price growth for a number of years.
However, Zoopla believed the snap election in December could potentially bring forward the traditional seasonal slowdown often seen at Christmas, making this a potentially short-lived recovery.
London bounces back in October
Zoopla remarked that no UK city had seen average price growth above five per cent in October, but some cities came close. Leicester proved to be the strongest urban property market in the UK, where house prices grew 4.7 per cent.
Manchester was a close second, with annual price gains of 4.6 per cent in October.
In contrast, prices grew by just one per cent in London, but this was the fastest gain seen in two years. Just a quarter of London-based postcodes saw falling property values, compared to 85 per cent in 2018.
Slow growth in London in recent years was thought to stem from what Zoopla described as stretched affordability, where prices exceed the prices potential buyers are in a postion to afford.
The property portal revealed that a decrease in the number of new properties for sale in the capital was the likely culprit for rising prices, coupled with a bounce-back in demand. The falling sales suggested that homeowners were taking a wait-and-see approach, and the prospect of a new general election could have the potential for them to continue doing so until the outcome is clear.
Overall, Zoopla estimated that UK homes were worth an average price of £221,831, having grown from £217,269 in 2018.
Solid fundamentals support growth
Stronger price gains in a number of cities indicated that local economies outside the capital were faring well, but growth was expected to moderate from 2020 onwards. This came after an average price gain of 15 per cent since 2017, as seen in cities such as Edinburgh, Leicester, Manchester and Birmingham.
Richard Donnell, research and insight director at Zoopla, explained: “While the London housing market has been in the doldrums, market conditions in regional cities have been stronger over the past two years, with demand supported by employment growth and attractive housing affordability.”
The election campaign took a darker turn this week, as both the Conservatives and Labour faced criticism for their respective handling of concerns over alleged Islamophobia and anti-Semitism internally.
The latest opinion polls suggest that the Conservatives are maintaining a lead over Labour, but the government’s voter registration data suggested that a record number of people aged 44 and under registered to vote before the 26th November deadline.
This could prove significant, as the 2017 snap election was ultimately influenced by the higher-than-expected turnout among younger voters.