Manch­ester beats Leeds, but it’s all good news for the North

Prop­erty Re­port

Yorkshire Post - Property - - PROPERTY NEWS -

Sharon Dale, Prop­erty Editor

How­ever, the av­er­age house price in York­shire’s most eco­nom­i­cally vi­brant city is still higher at £153,400, whereas in Manch­ester it is £151,200.

This small dif­fer­ence is one of the rea­sons for Manch­ester’s re­mark­able an­nual rise, ac­cord­ing to Richard Donnell, In­sight Di­rec­tor at Home­track.

He says that prop­erty in­vestors are at­tracted to Manch­ester’s low­est value ar­eas, where rental yields are high.

“When we say city, what we mean is city re­gion and Manch­ester is big­ger than

Leeds and there­fore of­fers more in­vestor op­por­tu­ni­ties and more af­ford­able ar­eas for home buy­ers.”

He adds that a lack of sup­ply and high de­mand has pushed up prices, and points to the pace of re­gen­er­a­tion in Manch­ester and a go-ahead city coun­cil, which has forged part­ner­ships with de­vel­op­ers to de­liver new hous­ing.

Sh­effield, the only other York­shire city in­cluded in the in­dex saw a 4.3 per cent in­crease in house prices.

Res­i­den­tial prop­erty val­ues in all Bri­tain’s cities rose in 2016 as de­mand ran ahead of sup­ply. Mean­while, weak­en­ing de­mand and record high un­af­ford­abil­ity in Lon­don con­tin­ues to re­duce the rate of house price growth.

The head­line rate of the Home­track UK Cities House Price In­dex stands at 7.2 per cent, down from 7.7 per cent in 2015. Growth in the fi­nal quar­ter of the year bounced back by 2.2 per cent af­ter weak growth over the third quar­ter fol­low­ing the Brexit vote.

Lon­don prices rose by 7.3 per cent over 2016. This is the low­est an­nual rate for more than three years. Richard Donnell be­lieves this is why the im­pe­tus for house price growth is shift­ing from the cap­i­tal to re­gional cities.

Lon­don is now the sev­enth ranked city in Home­track’s house price growth rank­ings.

Other cities to out­per­form the cap­i­tal over the last 12 months in­clude Ox­ford, where prices grew by 8.1 per cent, Portsmouth 8.0 per cent, Southamp­ton 7.9 per cent and Birm­ing­ham 7.5 per cent.

In Lon­don, house prices are now an av­er­age 14.2 times earn­ings, which is a record high level of hous­ing un­af­ford­abil­ity and Home­track say this points to­wards a pe­riod of price read­just­ment over the com­ing years.

Richard Donnell says: “This lat­est UK city house price in­dex re­veals how the im­pe­tus for house price growth is shift­ing to more af­ford­able cities where the re­cov­ery in house prices has been more muted in re­cent years.

“In Manch­ester, the un­der­ly­ing mar­ket con­di­tions re­main strong, with the sup­ply of homes for sale only just man­ag­ing to keep pace with de­mand. This is keep­ing the up­ward pres­sure on house prices. A sim­i­lar pic­ture is emerg­ing in other re­gional cities and points to con­tin­ued, above av­er­age price in­fla­tion in re­gional cities over the next 12 months.”

He pre­dicts that 2017 will be a year when the north-south di­vide in house prices may nar­row once again. “De­vel­op­ers are look­ing out­side Lon­don and the South East to Birm­ing­ham and the North where there is bet­ter af­ford­abil­ity and so are buy­ers. Young peo­ple are think­ing ‘what’s the point of work­ing in Lon­don where we’ll have to live like stu­dents, when we can get a job or set up a busi­ness in the north, where we can af­ford a home.”

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