Manchester has become the latest UK property hotspot, after it was revealed today that property values in the city increased faster than any other in the country.
Values in Manchester rose by 8.8% in February compared with the same month a year earlier thanks to a surge in transactions, while Portsmouth saw the second highest annual house price growth last month, with an increase of 8.1%, as buyers return to the market supported by an improving jobs market and record low mortgage rates.
According to the Hometrack UK cities house price index, which tracks price movements across the UK’s 20 biggest cities, Bristol also experienced high price growth, with an 8% increase in property values last month, although this is down sharply from the annual house price rise of 12% in the 12 months to February 2016.
Another city that is seeing capital growth cool sharply is London, where the rate of annual price growth has dropped to 5.6% - the lowest level since 2013. London has now fallen to 10th in the list of the fastest growing cities, owed in part to weaker demand from property investors.
Slower growth in London is acting as a drag on the headline rate of growth for Hometrack’s UK Cities Index, which is now running at 6.4%, down from 6.9% a month earlier and 7.8% a year ago.
Richard Donnell, insight director at Hometrack, said: “Levels of housing turnover across UK cities are expected to remain broadly flat over 2017.
“There is some further upside for sales volume in regional cities but much depends upon how would be buyers respond to external factors, not least the impact of lower real wage growth, the potential for higher mortgage rates and whether demand will be impacted by the triggering of Article 50 at the end of the month.”
Although buyers are fully aware of the government’s plans and timescales for Brexit, Donnell insists that there remains “huge uncertainty” over what this means for the economy over the next couple of years and beyond.
He added: “In cities where affordability remains attractive we expect demand to hold up in the short term albeit with slower growth in sales volumes.
“Overall we continue to expect the rate of house price growth to moderate over the rest of 2017.”
See below for the Hometrack House Price Index figures.
Table 1: City level summary, February 2017
Source: Hometrack UK City House Price Index