According to the data, the slowdown in the capital has spiraled out into cities across southern England with price growth ranging from -0.6% in Oxford to +2.2% in Bristol. Slower price growth is a result of weaker buyer demand.
Zoopla found that housing sales in southern England are down 13% since 2015 – the peak year for sales – primarily a result of affordability pressures and higher stamp duty costs in this part of the country. Brexit uncertainty has been a compounding factor, meaning households have been delaying decisions over home purchases.
However, Northern cities continue to buck the trend and defy the slowdown seen across the rest of the country with stronger house price growth. Liverpool leads the way with average house prices up 5.7% annually to £122,100.
Leicester, Manchester and Glasgow are also registering house price growth in excess of 5% per annum. These cities have rising employment rates and attractive levels of affordability with prices rising off a lower base. Prices in Glasgow (7%) and Liverpool (4%) are still only just above the price levels recorded in 2008.
Liverpool and Glasgow have registered the highest increase in housing sales since 2015 of all the cities, with transactions up by 19% and 12% respectively. On average, property sales increased by 6% across all cities in northern England in the last three years (2015 to 2018).
Richard Donnell, Research and Insight Director at Zoopla, comments: “The housing cycle continues to unfold at different speeds across UK cities. London has led the overall market along with Cambridge and Oxford. While sales in London are down 20% on 2015 levels, prices are flat over the last 12 months. The signs of firmer pricing we recorded last month have continued into March with fewer London postcodes registering price falls. More realistic pricing and better value for money for potential buyers means sales volumes have stabilised.
Cities across southern England are 18-24 months behind London. House prices have increased significantly ahead of earnings in recent years causing the rate of price growth to now slow due to weaker demand and lower sales volumes. Price growth is set to remain weak as affordability levels start to re-align with what buyers are prepared to spend.
House prices and sales volumes continue to increase in regional cities outside southern England. Prices in these cities have recorded modest gains over the course of the last decade and affordability remains attractive. As employment levels and incomes rise, households have the confidence to bid up the cost of housing, with four cities registering price growth of 5% or more per annum.”
