Edinburgh is the fastest growing city (7.7%), with Birmingham, Manchester, Leicester and Liverpool all growing by more than 6% per annum. The rate of growth in London is 1.6%.
The level of house price inflation since the end of the 2009 downturn varies widely, from 6% in Aberdeen to 86% in London.
Cities outside southern England have further room for house price growth. We expect regional cities like Birmingham and Manchester to increase by 20% to 30%, and average house prices in London to drift lower in real terms in the coming 2 – 3 years.
The annual rate of house price growth across London is 1.6%, due to lower turnover (down 16% since 2014) creating scarcity.
Edinburgh is the fastest growing city this month, followed by Birmingham, Manchester, Leicester and Liverpool.
House prices are falling in real terms in Southampton, London and Oxford, and in nominal terms in Cambridge and Aberdeen.
The growth in house prices has been a southern England phenomenon. Cities like Oxford and Cambridge have performed like extensions of London, while robust price growth in Bristol has resulted in a 70% increase since 2009. There’s a clear gap between these and the remaining UK cities, each of which have experienced varied growth. These differentials are explained by economic and demand-side factors.
Whilst the rental market is still much smaller than the owner-occupied market, there are more new lets a year than new sales as turnover in the rental market is higher.
Rental growth in London has run well ahead of earnings, partly explained by greater levels of sharing amongst renters pushing affordability to a high. Rental falls in 2008-9 and weak rental growth since has resulted in rental affordability improving in northern regions.