- PROPERTY PRICES AT HIGHEST POINT SINCE THE 2007 PEAK
PROPERTY PRICES AT HIGHEST POINT SINCE THE 2007 PEAK
House prices in all cities in England have risen above their 2007 peak for the first time since the financial crisis.
While it took less than three years for homes in London to regain their previous highs, it has taken up to 12 years in other cities, according to our monthly Zoopla UK Cities House price index.
Meanwhile, the annual rate at which property values are rising across all UK cities reached a 33-month high of 3.9% in January 2020.
All cities apart from Aberdeen posted annual house price inflation of at least 2% in January; the first time this has happened since February 2017.
Which cities recovered quickest?
Central London was the first market to regain the house price peak seen immediately before the global financial crisis struck in 2007.
Property prices in the capital regained their pre-crisis level just two-and-a-half years after prices first started to fall, buoyed by overseas buyers entering the market following a drop in the value of the pound.
Cities in southern England were the next quickest to regain their former property valuations, with Oxford and Cambridge leading the way, taking just 3.7 years and 3.9 years respectively.
By contrast, Newcastle was the last city to see a recovery, with house prices taking 12.2 years to reach their former peak, only doing so in late December 2019.
Richard Donnell, head of research and insight at Zoopla, said: “It has taken 12 years for house prices in all English cities to return to their previous pre-crisis levels. Some cities returned to 2007 levels within four years, as the economy and job growth rebounded. In others, it has taken much longer as the mismatch between demand and supply has been less pronounced.
“An imbalance between supply and demand is supporting the current rate of house price growth – a trend we expect to remain in place in the first half of 2020.
“Strong demand and attractive affordability are sustaining above average price growth in Nottingham despite an increase in supply. The same will apply to other cities including Liverpool and Manchester. The growth in supply in Oxford and Cambridge is more likely a result of sellers, who were sitting on their hands waiting for market conditions to improve, before eventually deciding to make their move, encouraged by improving housing market sentiment.”
Where is price growth currently fastest and slowest?
Cities in northern regions continued to post the strongest gains, with Edinburgh leading the way with house prices rising by 5.9% during the past year, followed by Nottingham and Leicester both at 5.3%.
At the other end of the scale, property prices continued to fall in Aberdeen, losing 4.3% of their value.
What’s the outlook?
Zoopla’s data shows that demand for homes is continuing to outstrip active sales listings, putting further upward pressure on prices.
The number of homes on the market increased by just 2.6% in January 2020, compared to January 2019.
But demand from potential buyers has soared by 26% during the same period.
Despite the upsurge in supply at a national level, the stock of homes for sale has actually fallen in nine cities in the index, dropping by as much as 6% than a year ago.
Of the three cities registering annual price growth of more than 5%, Edinburgh (5.9%) and Leicester (5.3%) have fewer homes available for sale than a year ago, with stock in Edinburgh down 2%, and Leicester down 6%.
Richard Donnell said: “We do not expect a material acceleration in the rate of growth in the foreseeable future, as affordability pressures will limit the scale of price growth, especially across southern England.
“There is a risk that, in some markets, sellers may become unrealistic about the expected sales price for their home. This is more likely in London and southern England where the market has been weak, and supply remains constrained.
“Housing demand is up, but there remains a price sensitivity amongst buyers, especially in the highest value markets.”
Top 3 takeaways
1. House prices in all cities in England have risen above their 2007 peak for the first time since the financial crisis
2. The annual rate at which property values are rising across all UK cities reached a 33-month high in January
3. All cities in the UK apart from Aberdeen posted annual house price inflation of at least 2% in January, the first time this has happened since February 2017