As house price growth in the UK’s cities slows across much of the country, new figures reveal that sellers in the south of England are having to offer the biggest discounts to attract buyers.
Both Oxford and London saw property sellers lowering their prices by an average of 4.8% in the first quarter of this year, according to the latest data from Hometrack, up from 2016’s less than 2% average discount in the two cities, which recorded the biggest asking and selling price gap across the UK.
In Cambridge, which had once seen homes go for 1% more than asking price back in 2016, prices were being lowered by an average 3%, followed by Southampton and Portsmouth which saw a similar decrease.
North comes out on top
However, looking to the north of England, the picture was significantly brighter. Manchester was the star performer in terms of house price growth during the 12 months to April 2018 with an average 7.7% rise, and Hometrack predicts that this trend will continue. Birmingham, Leicester, Nottingham, Cardiff, Sheffield and Edinburgh are also forecast to see the strongest future growth in the country.
The gap between asking price and selling price was revealed to be shrinking the most in northern cities, with both Birmingham and Manchester registering the UK’s smallest discounts of 2.6%. Although still above average, the gaps in Liverpool (4.7%) and Newcastle (5.5%) are getting smaller as market performance improves.
Sellers need to accept reality
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The report says: “Market conditions are weakening in south eastern England but the size of discounts is less severe as prices are adjusting in weaker demand rather than as a result of adverse economic impacts. However, stretched affordability, Brexit uncertainty and multiple tax changes have impacted demand and mean sellers having to accept larger discounts to asking prices.”
Richard Donnell, insight director at Hometrack, said: “The strength of house price growth and level of discounting from asking prices reveals how the current housing cycle continues to unfold. The overall pace of city level growth has lost momentum as a result of virtually static prices in London and slower growth across southern England.”
“The cities index reveals how macro and local factors such as the strength of the local economy and the relative affordability of housing are influencing the pace and direction of house price growth.”
The more realistic pricing levels in cities such as Birmingham and Manchester should serve to keep the property markets in these areas moving quickly, where homes are much better value than they are elsewhere in the country and demand is consistently high.
