City house prices grow by over 10% in a year despite Brexit fears
The run up to Brexit had little impact on house prices in the UK’s major cities. The average house price rise across the 20 major UK cities was 10.2%. The Hometrack UK Cities House Price Index gives an insight into the trends of property prices in the last twelve months and there was particular interest this year in light of the EU referendum vote that took place in June. Before the vote, it was expected by some analysts that the rate of growth in house prices would slow down. However, the 10.2% house price growth in June was the same as May this year and even higher than the 6.9% growth seen a year earlier in June 2015. As well as prices remaining steady, the index suggests house sales remained strong in UK cities.
Nevertheless, the real effects of Brexit on property prices in cities may not be known until later on. Hometrack said it was well-known that the true effects of housing trends can be delayed and take time to emerge although some trends are already becoming apparent.
A north/south divide with London worst hit
It’s believed that London would be worst affected by any slowdown in the housing market. One reason for this is because data was already showing a growing gap between an increase in the supply of property in addition to less sales happening. It indicates a trend that’s set to continue in the months ahead.
Insight director at Hometrack, Richard Donnell, says: “The potential difficulties that the London property market had in the run up to the EU vote will only intensify with the vote going the way of Brexit which is why the capital is seeing significantly slower rates of sales.”
Another interesting trend emerging from the index was a growing divide between the north and south of the country. With an annual growth rate of 14.7% Bristol stays the city that has the highest price rises in the UK. However, this bucks the general trend of cities in the south of England such as London, Cambridge and Southampton where year-on-year house prices slowed down from May to June this year.
This is in contrast to cities in Scotland and northern England such as Glasgow, Liverpool, Manchester, Leeds and Liverpool where there has been a strong growth in prices. Improved local economies, lower mortgage rates and the potential of properties to yield a higher return for investors all had a positive effect on prices.
In London, new property listings rose by 16% in the previous three months in comparison with the preceding 12 months, yet there was a fall in sales of 8%. This is a clear indication of the negative pressure house prices in the capital are experiencing. Another sign of the north/south divide was that in Manchester there was only a 4% rise in new listings yet house sales rose by 6%.
Richard Donnell still feels it’s too early to say what definite effect Brexit will have on the housing market in the long-term, though he concludes: “Our view is that there is likely to be a slow down in the volume of house sales and price growth will moderate in the latter part of the year. What’s clear from our House Price Index is that London will be hardest hit by any slowdown.”