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House prices in Britain’s largest cities see double digit growth

by International Commercial Investment on July 23, 2016

Source: Daily Mail

House price rises in Britain’s major cities were in double-digits in June despite the economic uncertainty caused by the EU referendum, a new report suggests.

Average values were 10.2 per cent higher than a year ago, matching the annual rate of growth seen in May, according to property analysts Hometrack.

However, it also warned that price growth and sales of property are expected to cool in the second half of this year, with London bearing the brunt of the slowdown.

The 10.2 per cent rate of growth in annual house prices compares to 6.9 per cent recorded in June 2015.

It said a surge of investors piling into the housing market earlier this year helped to keep prices pushing upwards.

On April 1, a stamp duty surcharge of 3 per cent was introduced for buy-to-let investors and there were signs of investors rushing to snap up properties before the tax increase came into force.

The Hometrack report tracked house prices across the country’s 20 biggest cities and found that Bristol has the fastest growing values with a year-on-year growth rate of 14.7 per cent.

The annual house price growth in London and in other cities in the south of England, such as Cambridge, Southampton and Bournemouth started to slow between May and June, according to the report.

By contrast, large cities in the North and Scotland – including Glasgow, Liverpool and Leeds have registered strong growth on the back of more affordable prices compared with the south, improving local economies and higher returns for landlords making purchases attractive to investors.

Values in regional cities appear to have held up during the referendum period, Hometrack said.

It is not the same story in London, where rising supply and relatively few sales have pointed to slower house price growth in the months ahead, it said.

Richard Donnell, insight director at Hometrack, said: ‘The headwinds that were facing the London market in the lead-up to the EU referendum have intensified on the back of the vote to leave and are resulting in slower sales rates.

‘It is still early days, and seasonal factors also need to be considered, but the growth in new listings and slower sales points to slower price growth in the months ahead.’

He said the growth in homes coming on the market in London reflects a mix of new homes coming through from London’s development pipeline and investors selling some of their properties.

He continued: ‘In contrast, in many large regional cities, sales appear to have held up thanks to a combination of much better housing affordability, improving economic growth and record low mortgage rates helping to stimulate demand.’

He said it is ‘still very early days’ to assess the full impact of the vote to leave the EU on the housing market.

But he added: ‘Our view remains that sales volumes are likely to slow and price growth will moderate over the second half of the year.

‘The severity of a slowdown will depend upon the response of consumers and businesses to the uncertainty created by the decision to leave the EU and the impact this has on the economy. The early market activity data confirms our view that London will bear the brunt of any slowdown.’

International Commercial InvestmentHouse prices in Britain’s largest cities see double digit growth