The latest Hometrack Cities Index has been released showing that price inflation across the UK’s 20 major cities is running at 4.9% per annum, down 6% on last year but a 14-month high where the quarterly growth rate is concerned.
Edinburgh leads the way with a growth rate of 6.7%, the fastest in the nation and enough to overtake Manchester (6.5%) and Birmingham (5.9%). But it’s not such good news for homeowners in London where growth has stabilised at 2.3% annually, but 85% of the capital has seen prices decrease. The market in Aberdeen has also continued to decline, with the only city to see negative growth.
This autumnal growth is thought to have been spurred by a late flurry of property transactions in September as the market largely found its feet during the summer months after a long period of uncertainty. It’s likely that these steady market conditions will continue into the New Year as the market once again continues to gain momentum.
It is unlikely that any increase in interest rates that next month might bring will impact the rate of price growth in cities, as rates should still remain low resulting in those outside of a fixed term mortgage seeing a manageable jump in monthly payments. There has also been a large degree of safeguarding with homeowners having to prove that they can afford a much larger monthly payment to what they might currently be paying.
As the final stretch of 2017 comes into view a late flurry of city-based property transactions has seen a degree of stability return to the market. Due to the generally higher price tag of city living, it is these areas that have been impacted by recent market uncertainty the most and although growth is still down year on year, it will be a promising sign for these homeowners.
Unfortunately for London, it continues to be last year’s must-have, waning in popularity amongst buyers due to the high price of the capital’s property, while Edinburgh shows extremely strong growth to overtake Manchester for the top spot.
That said, poor Aberdeen remains the toffee penny in a seasonal box of Quality Streets. Once such a firm favourite it is now consistently last where demand is concerned, left in the box long into the New Year, chosen by just a few who remember the glory days. Much as tastes for sweets today have shifted it is unlikely Aberdeen will find any new-found popularity amongst buyers and it continues to suffer from the decline in the oil industry.
Despite the overall renewed level of confidence, the market should continue to tread cautiously at least until the year is out. However, growth will remain subdued but consistent across the more affordable options such as Manchester, Birmingham, Leicester and so on.
London, along with the other over-inflated cities such as Oxford and Cambridge, will no doubt continue to struggle due to their much higher price tags, and these areas will be the last to see any meaningful return of buyer demand.Russell Quirk