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A PIECE OF ENGLAND

A UK buy to let property blog

26/6/2020

Hometrack Cities Index May 2020

 
Defying the national averages, the UK's major cities continue to see steady house price growth, particularly in Northern England and the Midlands. 
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Headlines

  • UK house price inflation is +2.4%, up from 1.6% at start of year. UK city price inflation slows to +2.1%.
  • We expect UK house price growth to remain around +2% over the next quarter. We do not see any downward pressure on prices materialising until much later in 2020.
  • New sales are back to pre COVID levels, as is the flow of new supply although the stock of homes for sale is 15% lower than a year ago. This will support prices in short-term, but demand is starting to fall off a high base and we expect it to decline further over the summer months and into the autumn.
UK house price growth is 2.4% on the year, up from 1.4% at the start of 2020 as the post-election rebound in market activity pushed house price inflation higher.

The rate of growth in the 20-city index has moderated from 2.4% in April to 2.1% in May. House price growth over the last 12 months has been strongest in Nottingham (4.3%), followed by Manchester (3.9%). Prices are falling in Oxford (-0.6%) and Aberdeen (-2%).
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​Annual growth rate to remain at 2-3% in Q3 2020

The bulk of new pricing evidence continues to come from sales agreed before the lockdown. Data on pricing for new sales agreed in the last 4 weeks is starting to feed through and points to a resumption in the upward pressure in house prices seen at the start of the year.

We expect the headline rate of house price growth to remain in the 2-3% range over the next quarter. We do not see any downward pressure on prices materialising until much later in 2020.

​Asking prices for sold homes 7% higher than last year

One indicator is the average asking price for homesmarked as sold on Zoopla in the first 2 weeks of June which are 7% higher than a year ago.

This is a return to levels seen over the first quarter of 2020. We are not saying the growth rate in our UK house price growth is going to rise over 5% in the near term, but the general direction of the two series track each other over time supporting our view that house price growth will hold up in the near term.

​Strongest rebound in sales in northern cities

New sales agreed, compared to February this year, have recovered strongly in English cities. The rebound in sales has been led by cities in northern England - Leeds, Sheffield and Manchester. In English cities where the recovery in sales has been weaker, including Bristol, Newcastle and Cambridge, this may not be solely due to demand-side factors, but the available supply of homes for sale.

​All content from Zoopla/Hometrack - the full report may be found here

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