House prices in key cities across the UK increased by 4.6% in the 12 months to May 2018, led by much higher growth in Edinburgh and Manchester, the top two urban hotspots.
The latest data shows that annual price growth over this 12 month period was 7.1% in Edinburgh and 7% in Manchester while prices fell by 5.7% in Aberdeen and by 0.9% in Cambridge, the only two declining house markets.
The index from Hometrack also shows that prices increased year on year by 6.6% in Bournemouth, by 6.5% in Birmingham and Nottingham, by 5.9% in Liverpool, by 5.7% in Leicester and by 5.5% in Cardiff, all well above the national average.
The market in London is slowing with prices falling in 20 boroughs and the capital city seeing annual price growth of just 0.4%. But the index report points out that with house prices in regional cities rising faster than London, the gap between London and the rest of the country is narrowing.
Hometrack expect this gap to narrow further over the coming months. ‘Over the next 12 to 24 months we expect the gap between London and other cities to narrow further, mirroring the trend over 2002 to 2005 when London house price growth was weak after a period of out-performance from 1996 to 2000. In contrast, regional housing markets had under-performed and only started to register strong growth from 2001 onwards, which closed the gap to London,’ the report says.
According to Graham Davidson, managing director at Sequre Property Investment, the figures show that Manchester is currently a good bet for landlords as the city has high tenant demand and healthy rental yields as well as rising prices.
‘Landlords who have yet to switch their buying habits for investment purposes should really consider their next move. It’s not a wise tactic to rely on capital growth alone and the North West in particular should be a firm focus for investors seeking a combination of high yields, capital growth and an ever growing talent pool looking for high quality rental accommodation,’ he said.
‘Manchester isn’t the only city as Liverpool and Leeds also continue to be hotspots and many investors are yet to take advantage of this. Prices in Liverpool are still 6% below their 2007 peak and with strong financials, we expect this city to mirror the success of Manchester,’ he added.
Craig McKinlay, sales and marketing director at Kensington Mortgages, pointed out that a shortage of supply is evident in cities like Birmingham, Manchester and Nottingham so prices are expected to keep rising.
‘The inconvenient truth is that the long term solution for this problem will require considerable planning and commitment. Reaching housing targets for future generations still needs considerable investment and until this is done, prices will continue to creep up,’ he explained.
