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House prices continue to rise in UK’s big cities

by International Commercial Investment on May 30, 2016

Source: Property Investor Today

Residential property prices in cities such as Bristol, Birmingham, Leeds and Manchester have increased significantly over the past year, a survey has suggested.

Hometrack, which monitors property prices in 20 UK cities, said that the rise was fuelled by interest from buy-to-let investors looking to complete transactions ahead of the April 2016 stamp duty change.

Most cities registered a spike in monthly property prices, led by Cambridge where the average price of a home rose by 15.8% year-on-year.

On an annual basis, only Aberdeen bucked the upward trend posting a fall of -6.1%.

With the EU referendum rapidly approaching, Hometrack, predict that activity in the housing will now fall away, echoing a number of other commentators. However, the prospect of a Brexit has done little to dampen house prices.

Richard Donnell, insight director at Hometrack, said that the economic impacts of a vote to leave will dictate the impact on the housing market.

“Our analysis of how the market has responded to external factors over the last 20 year suggests that a vote to leave on 23 June could result in a 5% to 10% fall in housing turnover with London bearing the brunt,” he said.

After a period of strong house price inflation over the last five years, the London market appears to face greater headwinds irrespective of the referendum vote.

Donnell continued: “Turnover fell 7% last year on the back of affordability constraints and weaker overseas demand. Tax changes for investors will reduce demand and we expect price growth to slow in the near future even if sterling were to weaken and improve the relative value of central London property.”

Unsurprisingly, Donnell believes that a vote to remain in the EU will have “the greatest upside” for house prices and transactions in regional cities where the recovery has been more short-lived and affordability less stretched than in southern cities.

“The boost to confidence from a vote to remain, coupled with low mortgage rates would most likely benefit cities such as Manchester, Leeds and Birmingham as housing demand and price growth seems set to sustain itself,” he added.

International Commercial InvestmentHouse prices continue to rise in UK’s big cities