By Four UK cities have witnessed an increase in house prices that has resulted in them being higher in the last quarter of 2018 compared to the same period in 2017, according to recent data from the Hometrack UK Cities House Price Index report in November 2018.
Manchester, Cardiff, Newcastle and Liverpool, all registered a higher average house price since last year, however, the remaining 16 UK cities included in the recent report all registered slower house price growth and house prices in London have continued to fall, according to the Hometrack data report.
The average house price in Manchester in the final quarter of 2018 was recorded at £168,900 with a 6.6 per cent year on year increase from 6.2 per cent recorded last year. Liverpool saw a year on year increase of 5.3 per cent, up from 4.2 per cent in 2017, which put the average house price this year at £120,300.
In Newcastle, the year on year house price increase jumped from 2.1 per cent in 2017 to 4.8 per cent this year, pushing the average house price to £131,200. Cardiff also saw a year on year increase in house prices which was recorded in 2017 at 3.9 per cent to 5.1 per cent, with the average house price registering at £209,600, according to the recent data from the Hometrack.
However, out of the 20 UK cities that were included in the recent report, many in the south of England reported the largest slow in the growth of the average house prices. Bournemouth, Portsmouth and Bristol all saw a decrease in the year on year house price growth since the final quarter of 2017.
In Bristol, the year on year house price increase dipped from 5.2 per cent in 2017 to 3.0 per cent in 2018, Bournemouth witnessed a decrease in average house price growth from 5.2 per cent to 2.3 per cent and Portsmouth year on year house prices dropped from 5.3 per cent in 2017 to 2.7 per cent in the final quarter of 2018, according to the recent Hometrack data.
This decrease in year on year house price growth has been pointed towards the increasing pressure of affordability. Man cities in the south of England record the highest ratios of average house prices to average wages outside of the capital, Cambridge and Oxford, according to Hometrack.
Back in the final quarter of 2017, Hometrack predicted that UK city house price growth would rise by 5 per cent, resulting in a 3 per cent average house price increase across the whole of the UK. Although in 2018, the average UK city house price growth didn’t hit the predicted 5 per cent mark, the average house prices recorded across the UK as a whole did increase by 3 per cent.
In part, this has been due to the current affordability levels across regional cities excluding the south of England, which has still remained attractive to buyers during 2018. However, house price growth has continued to outstrip average wage growth in the past five years which hasn’t been helped by the growing uncertainty of Brexit and the small increase in mortgage lending rates over the course of the year, according to Hometrack.
House price affordability in 2019
The future outlook for house prices in UK cities will be largely dependent upon affordability levels over the next few years. Currently, some UK cities have already seen a fall in their average house prices, which has tended to be in the most expensive cities where average wage growth hasn’t kept up with house price inflation in recent years. This has had a knock-on effect of above average house price growth in UK cities that are more affordable, according to Hometrack.
There are some external factors which have an effect on the average house prices in UK cities. These include the overall health of the UK economy, household sentiment and variations in mortgage rates. However, these factors pale in comparison to Brexit, which has been blamed for the growing uncertainty in the past year which is still set to impact early 2019.
Hometrack have predicted a 2 per cent increase in average house prices in UK cities in 2019 with a 2 per cent decrease in average house prices in London.
Average house prices across regional cities in the UK are also predicted to grow modestly over the course of next year compared to the higher increase reported in 2018. Although, house prices in the most affordable regions such as Glasgow and Liverpool are predicted to continue to grow by 5 per cent in the New Year according to Hometrack.
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