House price inflation across major cities in the UK is presently at 3.2 per cent annually while house price growth recorded in Leicester is +7.7 per cent and -2.8 per cent in Aberdeen, according to the October Hometrack UK Cities House Price Index data report.
There are six UK cities recorded a 6 per cent increase in house prices although house prices in the capital had fallen by -0.4 per cent. This indicates that the impact of Brexit on the UK’s housing market appears to be having a limited effect, suggesting stability in house prices in the immediate future, according to the recent Hometrack data.
Although other cities in the UK hadn’t been adversely affected by Brexit in terms of local residential property prices; London had started to feel the impact of recent economic uncertainty. This can be felt in the recent slowdown in the property market in this region, which resulted in a fall of house prices recorded by Hometrack in October.
Out of the 20 UK cities that were included in the recent report, city house price inflation ranged between +8 per cent to -3 per cent, and Leicester recorded the highest annual house price inflation rate of +7.7.
After Leicester, other UK cities which scored highly for annual house price inflation were Edinburgh at 7.4 per cent, Manchester at 6.3 per cent, Birmingham at 6.2 per cent, Nottingham at 6.1 per cent and Liverpool recorded at a 6.0 per cent increase, according to the Hometrack October report.
Comparatively, at the other end of the spectrum, the worst hit cities ranking with the lowest annual house price inflation rates were Cambridge at -1.1 per cent, London at -0.4 per cent, Bristol at 2.4 per cent and Bournemouth at 2.8 per cent. However, for Bristol and Bournemouth, although the annual house price inflation is low, it still remains above the capital’s annual house price inflation rate.
A closer look at the Brexit impact on housing
As the PM Theresa May battles on with getting her Brexit deal agreed by parliament, recent property industry headlines have been filled with the growing economic uncertainty about the Brexit deal and how the UK’s exit process from the European Union will affect UK house prices.
However, this recent data revealed that there is a limited direct impact on the residential property market across 20 UK cities caused by Brexit, as some cities reported a significant increase in their annual house price inflation rates in October 2018.
The discount between property asking prices and final sales prices continued to narrow in the larger regional cities across the UK, which the recent Hometrack data revealed. In Leicester, the average current house price was recorded at £177,200 and the average discount to asking price was recorded at 2.8 per cent.
Whereas buyers in Manchester were reported to receive less than 2 per cent discount to asking price and in Liverpool, the discount to asking price was reported as the smallest seen in the past five years.
In addition to this, the number of house sales agreed had increased in these locations, which had kept up with the supply of new housing and had helped to support the above average annual house price inflation, according to Hometrack.
Brexit uncertainty and London
Although property prices in UK cities hadn’t been too adversely affected by the Brexit vote and the impending deal soon to be voted on by members of parliament, some UK cities had experienced a slowdown in their local property market such as London, which had been significantly affected.
London’s annual house price inflation and recent property market activity had been aligned with the Brexit vote, according to the October Hometrack UK Cities House Price Index. The main area that this can be seen is in the decrease in the number of recorded house sales in the area, which had fallen by 15 to 20 per cent since 2014.
However, the ratio of house sales to new house supply in the capital had witnessed a marked increase since 2016 when the Brexit vote was cast. Interestingly, this can also be seen in other cities that hadn’t fared so well in terms of annual house price growth according to Hometrack.
Brexit can’t be the only cause at fault when discussing London’s decrease in annual house price inflation as there are various other factors at play. Issues such as recent tax changes, mortgage regulation and affordability are also behind London’s house price slowdown.
Since London’s house prices rocketed by 84 per cent in 2009, property prices outstripped the average household income. This was also combined with the new affordability tests for mortgages that were introduced in 2014, and the tax changes that took place between 2012 and 2016. Many buyers found that the amount they could afford to borrow was capped by the high property prices in the capital and they weren’t able to afford to purchase a home.
The Brexit deal has yet to be passed through parliament and there will likely be continued political debate and uncertainty surrounding the relationship between the UK and the EU after Brexit Day. However, the majority of the UK’s regional house market at least appears to be healthier than expected according to the October Hometrack UK Cities House Price Index, despite the general uncertainty.