The June Zoopla UK Cities House Price Index has revealed that average house price growth across southern cities is running at its lowest recorded level since January 2012.
In the year to June 2019, house prices rose by just 0.7% in these markets – the direct result of weaker demand for housing in this part of the country. The growing imbalance between the supply of, and demand for, homes in this region also hit its highest rate so far this year.
Overall, house price growth in UK cities slowed to 1.7% during the 12 months to June 2019, with price increases ranging from a high of 5.1% in Edinburgh to a low of -3.2% in Aberdeen ( a city which is still being badly affected by the slump in oil prices).
Above average growth continues to be posted in cities in the north of England, Scotland and the Midlands, but the slowdown in London is continuing to spread into cities across southern England and also appears to be feeding into parts of the Midlands as well.
Southern cities suffer
Six of the seven cities registering less than 1% in house price growth in June were located in southern England, with the exception of Aberdeen. The oil price collapse in 2015 is still having an impact, with prices in the Granite city now declining for the last four years. The index also showed the highest number of cities recording annual price growth of less than 1% in six years (since June 2013).
House price growth in southern cities ranged between +2% in Bristol to -0.3% in Cambridge. Although house prices recorded annual price falls in Cambridge for 10 out of the last 12 months, average property prices in the grand old university city are currently the second most expensive of all the 20 cities analysed in the Zoopla index, sitting at £425,800 – some £1,245 less than the average price registered in June 2018.
London, unsurprisingly, continues to retain its crown as the UK’s most expensive city, with prices averaging at £484,200.
“There is a clear imbalance between supply and demand for housing across southern cities and this explains why house price growth in these cities is at its lowest level since 2012,” Richard Donnell, research and insight director at Zoopla, said.
Northern cities perform much better
In northern cities underlying market conditions remain strong, with supply and demand more in balance. This is helping to support annual average price growth of 3.6% across this region.
Liverpool is witnessing the strongest market conditions, with the amount of new supply coming to the market in line with the number of sales being agreed. According to Zoopla, this is a clear indication that demand is meeting supply in the city and also reflects the strong price growth the city is currently seeing, with prices increasing by 4.9% over the year to June 2019.
Birmingham set for weaker growth ahead
While the UK’s second city has been one of the strongest performing cities since the Brexit vote in terms of price growth, market conditions seem to be shifting with weaker sales growth and increasing supply. This, Zoopla says, suggests that Birmingham could see stunted price growth in the coming months, with the rate of growth already slowing from 7% in June 2017 to 4% now.
“Robust demand from buyers continues to support house price growth in northern cities and Edinburgh,” Donnell added. “Average prices in northern cities are registering annual growth of 3.6%. This is a stark comparison to the 0.7% growth in southern cities. We expect regional cities outside the south of England to continue to out-perform, although there are early signs of weaker growth ahead in parts of the Midlands as successive years of house prices rising faster than earnings is beginning to weaken demand.”
What about London?
The index found that the London market is coming to the end of a three-year repricing process, with a slight improvement in the balance of supply and demand over the last six months due to a small, but important, rise in sales agreed and less new supply coming to the market for sale.
Although there are still small price falls across many parts of London on an annual basis, the annual price change did improve to 0.0% in June 2019 in comparison to -0.5% in June 2018.
“London has led the slowdown over the last three years, but here there are signs of greater realism on pricing from sellers and this has resulted in a small but important increase in sales,” Donnell concluded. “Affordability and weak market sentiment remain the main constraints on the London market.”
Zoopla UK Cities June Index – summary results, June 2019
City | Current price | %yoy | %yoy June-18 |
Edinburgh | £232,300 | 5.1% | 5.4% |
Liverpool | £124,100 | 4.9% | 3.9% |
Cardiff | £211,100 | 4.7% | 3.7% |
Nottingham | £155,800 | 4.7% | 5.0% |
Leicester | £180,300 | 4.6% | 5.9% |
Manchester | £171,200 | 4.1% | 5.8% |
Birmingham | £167,000 | 4.0% | 5.5% |
Belfast | £135,900 | 3.9% | 3.4% |
Sheffield | £139,400 | 3.5% | 3.8% |
Leeds | £168,400 | 3.2% | 3.8% |
Glasgow | £124,700 | 2.9% | 3.2% |
Bristol | £280,700 | 2.0% | 3.1% |
Newcastle | £128,100 | 1.5% | 1.8% |
Portsmouth | £239,100 | 0.8% | 3.2% |
Bournemouth | £291,800 | 0.7% | 4.5% |
Oxford | £404,300 | 0.5% | -1.4% |
Southampton | £227,300 | 0.5% | 1.6% |
London | £484,200 | 0.0% | -0.5% |
Cambridge | £425,800 | -0.3% | 0.3% |
Aberdeen | £160,100 | -3.2% | -5.7% |
20 city index | £257,000 | 1.7% | 1.7% |
UK | £220,000 | 2.1% | 2.8% |
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Source: Zoopla House Price Index, powered by Hometrack
