The housing market has got off to a fantastic start in 2020. As we look back at the success of January, it is clear to see that this is set to be yet another outstanding year in property.
As we have previously reported, Rightmove figures show that average asking prices are rising at the fastest annual rate ever recorded at this time of year – and this has now been confirmed by the latest UK Cities House Price Index from Hometrack and Zoopla.
The Index confirms that property values are rising rapidly across the country, with house price inflation hitting 3.9% year-on-year in our cities – the highest rate for two years.
However, when digging more deeply into the details, it becomes clear that not all regions are growing at the same rate. London and the South of England performed poorly compared to their counterparts in the North, with the capital seeing house price inflation of just 1.9%. – less than half of the national average, Other Southern cities like Portsmouth, Cambridge and Southampton fared even worse.
In contrast, the biggest Northern cities grew far above average. At the top of the growth table is Manchester which saw 4.5% year-on-year house price growth, following business growth of 41% over the last five years which has made it the best performing city in the UK. This has inspired remarkable population gains – 5,000 more people will move into the city centre every year until at least 2025 according to the latest State of the City Report from Manchester City Council – which are pushing up house prices.
The story is the same across other Northern cities, where growing populations are pushing up demand. Whilst we would normally expect to see a so-called ‘January bounce’, this year’s is unusually strong. Zoopla data shows a 26% increase in demand over the first four weeks of the year – and as with house price growth, this increase in demand is the highest for two years and most pronounced in the North.
Richard Donnell, head of research at Zoopla, explainedwhy demand has been so strong at the beginning of 2020, saying: “This is partly due to fading political uncertainty. Households who were holding off moving are now starting to return to the market and this momentum has been supported by low mortgage rates.”
The continuing expansion of the mortgage market is another good indicator of how healthy the property market is. For example, LMS reports that mortgage sales grew 3% in December, and expectations of a rate cut are likely to encourage even more people to take mortgages out over the course of 2020.
Nick Chadbourne, CEO of LMS, explains: “Average loan amounts grew in December, as we saw an increase of 3% across the country with borrowers taking advantage of competitive rates to release additional equity.
"The North of England spearheaded loan increases, with growth of 10% in both the North West and Yorkshire.”
With house prices growing, demand increasing and mortgages becoming more affordable all the time, this is the ideal time to purchase a city centre property and make the most of the upcoming capital appreciation.
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