House prices rose faster in Bristol than any other UK city in 2016
Posted 31 January 2017 by
Ben SalisburyLondon has dropped to 7th position in the latest Hometrack cities index of annual house price growth, trailing behind Bristol and Manchester in the top two positions.
Overall, across UK cities house prices grew by 7.2% in 2016, compared to 7.7% in 2015.
Bristol topped the table with prices rising by 9.6%, followed by Manchester which saw annual growth of 8.9%, its highest annual rate of house price inflation for 12 years, helped by the supply of new homes not meeting the demand.
Bristol actually saw the rate drop in 2016, from 11.6% in 2015 and could be caught by Manchester in the first quarter of 2017 because underlying market conditions remain strong in Manchester.
The report said in Manchester, “the supply of homes for sales is only just managing to keep pace with demand which is keeping the upward pressure on prices.”
The same is true in other big cities like Birmingham and underlines how “the impetus for growth is shifting from London to regional cities with more attractive affordability and headroom for further price inflation,” said Hometrack.
Weakening demand and record high levels of unaffordability were the reasons why London fell to register growth of 7.3%, barely above the UK city average and the lowest level seen in London since July 2013, partly due to the house price to earnings ratio reaching 14 times and “points to a prolonged period of price re-adjustment in the London housing market over the coming years,” Hometrack said.
Hometrack said it expected prices in the capital to rise by just 1% in 2017 as growth in regional cities continues to outperform London.
Falling unemployment and rising earnings helped stimulate demand in more affordable cities and housing markets where buyers were using record low mortgage rates to increase the cost of property.
Other cities that beat London in the property price race in 2016 were Oxford (8.1%), Portsmouth (8.0%), Southampton (7.9%), and Birmingham (7.5%).
Aberdeen, adversely affected by the dramatic fall in oil prices over the years, saw a turnaround in the final quarter of 2016 as prices rose by 2.9%, the second highest of the 20 city index, just behind Liverpool on 3% and a sign that the market is bottoming out in Aberdeen following an 11% drop in average prices since 2014.
“This latest house price index reveals how the impetus for house price growth is shifting to more affordable cities where the recovery in house prices has been more muted in recent years. Price rises are gaining momentum in cities where low mortgage rates are yet to be fully priced into housing” says Richard Donnell, Insight Director at Hometrack.
Donnell concludes: “2017 looks set to be a year when the north-south divide for house prices might finally start to narrow once again.”
Meanwhile, another report shows that one in 10 sellers made a loss on a property sale in 2016, illustrating further the conflicting nature of the complex UK property market.
Hamptons International estate agency found that the average seller made £90,227 profit after selling their home in 2016, rising to £256,136 in London after selling a property after owning it for eight years, almost ten times the average profit made in the north east of England where 29% of sellers made a loss.
The majority of sellers who made a loss in 2016 were from northern England and Wales. The worst performing area was Hartlepool in County Durham where 36% made a loss.