House prices in major UK cities increased by 3.5% in the last three months – the highest quarterly rise since 2014. This is according to the latest data from Hometrack, an analytics website that monitors residential house prices in 20 key cities across the country.
For property investors, these results demonstrate the stability of UK real estate. After recent political shocks, expected downturns in the market have not materialised, meaning property investment remains a viable and profitable approach going forward.
Over half of the 20 cities recorded faster growth than they did at the same point last year. Although overall increases slowed marginally from 2016 levels, the yearly rise was still an impressive 5.1%. This brings the average sale price within the index to £250,200.
As you’d expect, the findings vary across different regions although nearly every city (except Oxford and Aberdeen) experienced positive growth in the past three months.
The biggest gains were found in Birmingham (3.8%), Nottingham (3.8%), Liverpool (3.7%), Manchester (3.3%) and Leeds (2.8%) – a clear indication of confidence in buy-to-let hotspots outside of the capital.
London, with quarterly growth of just 1.9%, is becoming less attractive because prices aren’t just inflated but have no real scope to rise further. In fact, its annual growth rate of just 3.3% is the lowest it’s been for five years.
There’s more potential with Midlands and Northern properties, especially those with large student populations. This was supported by Richard Donnell, a research and insight director at Hometrack, who said:
“There is clear potential for additional house price growth in cities outside South Eastern England. House prices in London have grown 90% since 2009, making them unattainable for your average investor.
“As the economy continues to grow, and mortgage rates remain low, we expect house prices to keep rising at a steady rate and close the gap to London.”
Although sharp rises in the UK’s key cities may not be welcomed by residential buyers, investors should be buoyed by the latest data. More people will be pushed into renting, assuring you of tenant enquiries once an investment is made.
Furthermore, with house prices on a steady incline, capital appreciation provides an effective exit strategy in the medium to long-term. And with a current housing shortage, property will remain in high demand if and when you do decide to sell.
Research from Rightmove backs this up. They show that more homes are trading hands now than they were a year ago, meaning there’s still high activity and confidence in the property market. Their director, Miles Shipside, has said:
“A year on from the shock referendum result and subsequent dent in activity levels, the fundamentals remain strong.
“Low unemployment, low interest rates, strong demand and historic undersupply of homes are mitigating any wobbles in confidence and as a result nearly half the properties on the market, over 45 per cent, have sold signs slapped across them.”
If you’re looking to take advantage of the current property resolve as noted in the Hometrack index, Aspen Woolf have a range of investment opportunities in these key UK cities.
If you’d like more information on how the rental sector is growing, you might be interested to know that By 2021, the Buy-to-Let Sector Will Have Grown by 24%.