London accelerates UK’s house price growth

House price growth in UK cities has risen to 2.9%, supported by a 1% increase to house prices in London, according to the October Zoopla UK Cities House Price Index.

Zoopla revealed that this is the highest rate of growth for two years and follows a period of modest price falls.

The new report shows that house prices have been registering month-on-month price falls in less than a quarter of London’s housing markets – well down on the 85% of markets that registered price falls twelve months ago, and the lowest coverage of price falls since May 2017.

The shift in London house price momentum, Zoopla suggested, is down to a decrease in the number of new properties for sale which has restricted supply, reflecting a trend that has been developing over the last year and has been accelerated recently by the announcement of the General Election on 12 December.

Furthermore, Zoopla data revealed a notable increase in the number of sales agreed per agency branch. While Zoopla noted this increase was off a low base, it said this indicated renewed demand for housing in London after a sizable drop in sales volumes over the last three years.

Zoopla research and insight director, Richard Donnell, commented: “After a three-year repricing process accompanied by a sizable decline in housing sales, the London housing market is finally showing signs of life.

“The shift in momentum is clear, resulting from a lack of supply, increased sales and more realistic pricing, which bode well for higher sales activity in 2020, rather than a pick-up in house price growth.”

Across the rest of the UK, Zoopla also revealed that large regional cities are starting to show signs of slower growth. The report showed that since the start of 2017, house price growth has exceeded 15% across Edinburgh, Leicester, Manchester and Birmingham, but the pace of growth is slowing.

Zoopla said that all the cities covered by the index are registering price growth of less than 5% per annum – a trend that has become established over the last quarter – and this is the first time that Zoopla’s registered growth across all cities has been below 5% since November 2012.

Donnell continued: “While the London housing market has been in the doldrums, market conditions in regional cities have been stronger over the last two years, with demand supported by employment growth and attractive housing affordability. The rate of growth is slowing, and all cities are registering annual growth of less than 5%.

“The announcement of the General Election has brought forward the usual seasonal slowdown, but the last few weeks of the year pre-Christmas tend to be much quieter than after Boxing Day, when consumer interest in housing springs back to life.”

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