Hometrack have revealed the top northern cities set to narrow the north-south house divide.
Regional cities such as Edinburgh, Birmingham and Manchester are set for a 20-30% increase in house prices over the next four years, narrowing the gap between cities in the north and south.
The data suggests that the cities listed above are expected to close the ‘growth gap’ on the capital of London by a staggering 20%-30%.
This means that in nominal terms, the average house price in London has soared by an extortionate 86% since 2009. This is the same for Oxford and Cambridge who have also performed strongly as well as Bristol where the average house price has risen by 70% in just 9 years.
The report by Hometrack highlighted that Edinburgh was the fastest growing city in the UK which grew 7.7% in the 12 months from January.
Other northern cities such as Birmingham, Manchester, Leicester and Liverpool were close behind which all grew by an average of 6% per annum.
Although this is significantly less than the growth of the south, it does highlight the regional differences between cities in the north due to diverse demand and economic factors all playing a part.
In contrast, Hometrack further revealed that house prices in London are dropping in real terms, with the pace of growth in the capital slowing to 1.6% year-on-year.
This means that the UK city house price inflation is running at 5%, up from 4% in 2017.
This research further suggests that the income needed to support purchasing a home is as expected, well below the London average. This again brings about the question of sustainability with gross yields coming in well below 4.5% per annum.
With this in mind, they predict that house prices over the next three years will sink with lower turnover that has previously been seen. This combination will produce an undersupply and support price levels.
Richard Donnell, insight director at Hometrack, said: “The income to buy a home in regional cities is well below the London average so in the near term we expect to see rising house prices stimulating additional buying and market activity in those areas.”
“House prices have some way to increase before there is a material constraint on demand. This assumes mortgage rates remain low by historic standards and economy continues to grow.”
This news is good for investors looking to grow their portfolio in the north with Signature Investments having a range of investment opportunities in key northern cities such as Manchester, Liverpool and Preston.
To discover more about our diverse portfolio and how you can earn up to 8% ROI per annum with a hands-off investment, click here.