Impact of Brexit is not holding back regional cities benefiting from over 6% growth in house price and high level of market activity.
House prices for the top six regional cities is rising at over 6% growth year-on-year despite Brexit dominating the headlines according to Hometrack UK Cities House Price Index.
Leicester is leading with 7.7% growth followed by Edinburgh on 7.4%, Manchester with 6.3% and Birmingham rising 6.2% for the year compared to the index average of 3.6%.
Market activity is high from first time buyers and home movers in regional cities whereas Brexit and weaker market fundamentals are the compounding factor in the slowdown of the London market.
Brexit limited impact on housing
After two and a half years the Brexit exit process remains uncertain and analysis from Homtrack reveals it has limited impact so far.
The following table from Hometrack shows average house prices and annual change for homeowners to October 2018.
| City | Average house price | Annual change |
|---|---|---|
| Leicester | £177,200 | 7.7% |
| Edinburgh | £238,400 | 7.4% |
| Manchester | £167,800 | 6.3% |
| Birmingham | £163,200 | 6.2% |
| Nottingham | £154,100 | 6.1% |
| Liverpool | £121,000 | 6.0% |
| Sheffield | £139,300 | 5.4% |
| Glasgow | £122,600 | 5.3% |
| Leeds | £166,700 | 4.7% |
| Cardiff | £207,100 | 4.6% |
| Belfast | £131,200 | 4.3% |
| Newcastle | £131,100 | 4.2% |
| Oxford | £413,900 | 3.2% |
| Portsmouth | £241,200 | 3.0% |
| Southampton | £229,900 | 2.9% |
| Bournemouth | £290,000 | 2.8% |
| Bristol | £279,600 | 2.4% |
| London | £483,500 | -0.4% |
| Cambridge | £429,600 | -1.1% |
| Aberdeen | £164,100 | -2.8% |
In regional cities the size of the discount between asking and sales prices continues to narrow and is less than 2.0% for buyers in Manchester and average property values are £167,800.
The rise in house prices for regional cities means first time buyers would require a higher deposit, larger mortgage or higher earnings to purchase their first home.
Demand is strong with the number of sales completed increasing and keeps pace with the supply of new properties to the market supporting above average price inflation.
For remortgage buyers benefiting from higher prices, they have the opportunity to release capital which they can use to improve their home further increasing the value.
There are fewer buy-to-let investors making new purchases as higher stamp duty taxes mean they need larger deposits or higher rental income to cover the mortgage interest payments.
Fundamentals behind London slowdown
According to Hometrack timing of the slowdown in London market activity aligns to the Brexit vote and demand has been impacted by uncertainty recording a fall in sales of 15-20% since 2014.
Since 2016 the supply of new properties in London has grown faster than sales resulting in slower house price growth and this has been a trend with other cities with weak price growth.
London house price growth of 84% since 2009 has allowed the equity release buyer to access wealth using a lifetime mortgage to maintain their lifestyle, home improvements and holidays of a lifetime.
Housing market fundamentals such as affordability tests from 2014, tax changes, new mortgage regulations are the main drivers of the slowdown in London, says Hometrack.
Higher prices have reduced yields for buy-to-let investors and tax changes have impacted both overseas and second home buyers especially for inner London areas.
Given these factors property sales in London have fallen with average prices up only 2% since the Brexit vote in 2016 while other cities such as Manchester and Birmingham have seen a 15% rise in prices.
What are your next steps?
Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property to gift to a family member or friend or even buy a more expensive home.
Learn more by using the property value tracker chart, mortgage costs calculator and equity release mortgage calculator. Start with a free mortgage quote or call us and we can take your details.
