Average property prices in key UK cities up 2.1% year on year
Average property prices in key UK cities increased by 2.1% in the year to May 2019 but values vary depending on location from a rise of 5% in Liverpool to a fall of 4% in Aberdeen, the latest index shows.
Residential values also continue to fall in London and Cambridge while the rate of growth has weakened across southern England, mainly due to market fundamentals, including affordability, according to the Zoopla cities index powered by Hometrack.
After Liverpool, the next highest annual rise was 4.6% in Belfast, followed by 4.5% in Nottingham and Leicester, then 4.3% in Manchester, and 4% in Edinburgh, Birmingham and Glasgow.
After Aberdeen, there was a 0.5% fall in prices in Cambridge and a 0.4% fall in London. Prices increased by just 0.5% in Oxford and Portsmouth and by 0.8% in Southampton.
The index report also looked at the development of housing affordability for first time buyers. They are the largest group of buyers, accounting for 36% of sales. The research shows that the gross household income required by a first time buyer to buy a typical city home has increased over the last three years by £4,500, or 9%, to £54,400.
The income to buy ranges widely from a low of £26,000 in lower value cities such as Liverpool and Glasgow to a high of £84,000 in London but the income to buy across the three most expensive cities has fallen 5% since 2016. The report says that this is a result of a small fall in prices and a 0.5% decline in average mortgage rates since 2016. The income to buy in Aberdeen has fallen by 12% due to a sizable fall in average prices since 2015.
The income to buy has increased across all other cities since 2016 by as much as 20% in Leicester and 19% in Manchester. This is a result of above average house price inflation over the last three years.
Looking at the prospects for housing demand and house price growth moving ahead, it is more important to focus on the absolute income to buy, according to Richard Donnell, research and insight director at Zoopla. The data shows this remains at or below the national average in all cities outside southern England, except for Edinburgh.
‘There is a clear link between the income to buy and recent developments in house price inflation. In simple terms, the higher prices rise, the greater the income to buy and this reduces the number of potential buyers. The net result is weaker demand, fewer sales, lower price growth and, in some areas, price falls,’ said Donnell.
‘It is no surprise that housing sales have declined across southern England and price growth has weakened. Price falls are concentrated in the highest value markets across South Eastern England,’ he added.