Market stalls in south of England cities but north begins to boom

The average house price growth across southern cities is running at the lowest level recorded since January 2012, according to Zoopla. 

Prices grew by just 0.7 per cent in southern cities in the 12 months to June 2019.

House price movements in southern cities ranged between growth of 2.0 per cent in Bristol to a fall of 0.3 per cent in Cambridge. 

Despite house prices continuing to register annual price falls in Cambridge for 10 out of the last 12 months, average property prices in this university city are currently the second most expensive of all 20 cities analysed, sitting at £425,800. This is £1,245 less than the average price recorded in June 2018. 

London continues to be the most expensive city, with prices averaging £484,200.

“There’s a clear imbalance between supply and demand for housing across southern cities and this explains why house price growth in these cities is at its lowest level since 2012” explains Richard Donnell, research and insight director at the portal company. 

In London there has been a modest improvement in balance of supply and demand over the last six months thanks to a small increase in sales agreed and less new supply coming to the market for sale. 

Whilst prices are still registering small price falls across many parts of London on an annual basis, the annual price change has improved to a stagnant zero per cent in June in comparison to the 0.5 per cent drop a year earlier.

Donnell says that London has led the slowdown over the last three years, but here there are signs of greater realism on pricing from sellers and this has resulted in a small but important increase in sales. “Affordability and weak market sentiment remain the main constraints on the London market” he believes.

Meanwhile underlying market conditions remain stronger in northern cities where supply and demand are more in balance. This is supporting annual average price growth of 3.6 per cent across the major cities of this region.

The strongest market conditions are in Liverpool, where the amount of new supply coming to the market is in line with the number of sales being agreed. 

Zoopla says this is a clear indication that demand is meeting supply in the city and is reflective of the strong price growth the city is currently seeing, with prices rising by 4.9 per cent over the 12 months to June.

Birmingham has been one of the strongest performing cities since the Brexit vote, but market conditions appear to be shifting with weaker sales growth and rising supply. The portal says this indicates that Birmingham may see stunted price growth in the coming months, with the rate of growth already slowing from 7.0 per cent in June 2017 to 4.0 per cent today.

Donnell comments: “Robust demand from buyers continues to support house price growth in northern cities and Edinburgh. We expect regional cities outside the south of England to continue to out-perform, although there are early signs of weaker growth ahead in parts of the Midlands as successive years of house prices rising faster than earnings is beginning to weaken demand.”