Regional cities have higher house price growth and narrowing the gap with London as the capital struggles to make progress.
House prices in our cities are higher by 4.6% over the last twelve months based on data from the Hometrack UK Cities House Price Index with average prices of £257,200.
The highest rates of growth are registered from Edinburgh up 7.1% and Manchester higher by 7.0% with year-on-year falls from Aberdeen down -5.7% and Cambridge lower by -0.9%.
Rising house prices of over 6.5% per year in Edinburgh, Manchester, Bournemouth, Birmingham and Nottingham means first time buyers would require higher deposit, larger mortgage or higher earnings to purchase their first home.
For buy-to-let landlords with existing properties in these cities the rise in house prices creates more equity which they can benefit from if they sell in the future.
Regional cities closing the gap
Across the London City index house price growth is up 0.4% over the last 12 months prices but falling in nominal terms by up to -3.2% across almost half of the 46 local authority areas.
In contrast over the next 12-24 months the gap between London and other cities is expected to narrow further, mirroring the trend over 2002-2005.
The following table from Hometrack shows average house prices and annual change for homeowners to June 2018.
| City | House price | Annual change |
|---|---|---|
| Edinburgh | £225,300 | 7.1% |
| Manchester | £163,300 | 7.0% |
| Bournemouth | £292,500 | 6.6% |
| Birmingham | £159,900 | 6.5% |
| Nottingham | £150,100 | 6.5% |
| Liverpool | £118,800 | 5.9% |
| Leicester | £170,700 | 5.7% |
| Cardiff | £201,700 | 5.5% |
| Portsmouth | £239,400 | 5.4% |
| Sheffield | £136,600 | 5.2% |
| Bristol | £282,000 | 4.6% |
| Leeds | £162,900 | 4.4% |
| Southampton | £225,600 | 4.0% |
| Newcastle | £127,100 | 2.8% |
| Glasgow | £125,400 | 2.8% |
| Belfast | £126,200 | 2.1% |
| Oxford | £427,300 | 1.2% |
| London | £491,200 | 0.4% |
| Cambridge | £433,800 | -0.9% |
| Aberdeen | £178,300 | -5.7% |
Average property values in Edinburgh are £225,300 and represent 46% of London prices at £491,200 with the closest city to the capital being Cambridge at 88%.
One advantage of rising house prices for homeowners living in the regions is remortgage buyers can now release capital for home improvements, further increasing the value of their property.
For home movers leaving areas with the highest rising property values to areas with lower growth, they may have extra equity for a deposit to buy a larger home or can reduce their mortgage.
Prices falls in London reduce the gap
During a period of out-performance from 1996-2000 London house price growth was weak whereas regional housing markets had under-performed.
From 2001 the regions registered strong growth which closed the gap to London but this can also be helped with prices in London falling in nominal terms.
According to Hometrack, house prices in regional cities would need to rise by as much as 25% to take the price relative to London back to long run, historic benchmarks.
Cities such as Bristol and Cambridge have registered strong house price growth and the gap to the long run average is less than 5%.
In other cities such as Cardiff, Edinburgh, Liverpool and Leeds, house price growth of 20% to 25% would be required to return the price relative to the previous high.
For older homeowners living in cities the extra value in their property allows the equity release mortgage buyer to access wealth to repay an interest only mortgage or buy a more expensive home.
What are your next steps?
Speak to our LCM mortgage advisers if you are planning to move home, buying your first home, remortgaging your existing home to a new cost effective mortgage deal or are a buy-to-let investor.
For equity release buyers our London City Mortgage brokers can recommend lifetime mortgages allowing you to receive cash from your property to help maintain your standard of living as costs rise or gift to a family member or friend.
Learn more by using the mortgage monthly cost calculators, equity release calculator and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.
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