Manchester and Nottingham lead UK house price growth post-lockdown

 

House sales continue to boom even with the temporary halt in the housing market due to lockdown earlier this year. High demand is expected to support house prices into 2021, with the north of England leading the way.

The latest index from Zoopla shows house prices have risen by 2.6% between September 2019 and September 2020. This is up from a 1% increase a year ago, demonstrating how the surge in demand from buyers and movers is shaking up the housing market.

One key point from Zoopla’s latest report is the fact that the proportion of first-time buyers is now depleting. Instead, it is home movers and other buyer types who are most active right now. This is partly down to financial restrictions due to the current economic situation, as well as borrowing ability. Lenders are no longer as keen to offer 90% loan to value mortgages, meaning first-time buyers must find bigger deposits.

Regional variations are another important aspect currently affecting the housing market. Lockdown has seen a number of people re-evaluating what they want and need from their homes. More space, a better location and changing working patterns mean new property preferences are emerging. Cheaper house prices away from the capital therefore play a major role in new trends.

North and north-west in high demand

House prices in the north-west, Yorkshire and the Humber and Wales have risen by an average 3.3% on an annual basis. Zoopla’s index also shows which cities in particular are seeing exceptionally strong growth and demand.

At the top of the list is Nottingham, where average values have gone up by 4.7% since last September. This is based on analysis of sold prices, mortgage valuations and data for agreed sales.

Manchester follows closely behind with house price inflation of 4.2%. Leeds is next with a 3.9% increase, followed by Edinburgh (3.7%), Leicester (3.6%) and Liverpool (3.4%). The housing markets in all these cities had been strengthening in recent years long before the current change in conditions. As the economy and jobs markets in the north have developed, more people and businesses have relocated to these areas. This in turn has supported growth and investment in the property sector in the regions.

Expectations for Q4 and beyond

According to Zoopla, the present appetite for home movers and buyers should remain the same in the coming months. The stamp duty holiday is providing a major incentive for people who may have held off before to take action now.

The property portal believes that home mover demand will remain especially high. This will continue to support the market, and the “unseasonably strong” conditions. However, the view is cautious towards the “relatively rapid increase in new supply”. House prices could taper if demand were to suddenly fall.

Richard Donnell, research and insight director, says: “Housing market conditions remain strong as new restrictions are introduced to control the spread of Covid-19. These changes are likely to continue to support housing demand in the near-term as the importance of the home grows.”

“However, the housing market will not remain immune to the impacts of weaker economic growth and rising unemployment.”

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Manchester and Nottingham lead UK house price growth post-lockdown

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