House prices in all English cities have finally surpassed price levels recorded at the last peak in 2007, with prices across the UK approaching a three-year high.
UK city house price growth remains at 3.9%, according to the latest cities House Price Index from property website Zoopla, with every city except for Aberdeen recording positive annual house price inflation, typically in excess of 2% a year.
Newcastle is the last English city to return to its 2007 price level, having achieved this milestone at the end of last year. In contrast, Southern cities reached their 2007 levels back in 2014. Central London prices, meanwhile, rebounded in just three years due to an influx of overseas buyers following the fall in the value of sterling. This made owning a home in the capital more affordable for foreign buyers.
On average, British city house prices are 37% higher than they were at the pre-crisis peak recorded in October 2007.
Supply failing to keep pace with demand
Prices in UK cities may have returned to pre-crisis levels, but there is still a shortage of properties available to buy.
The total stock of homes available for sale is just 2.6% higher than this time last year, Zoopla said, with stock having fallen across nine cities, including Edinburgh and Leicester.
However, eleven cities have more homes for sale than this time last year, including Oxford, Cambridge, Nottingham, Liverpool and Manchester. The site said it expects this imbalance between supply and demand to remain over the first half of 2020, which will support upward pressure on prices.
Sellers urged not be “unrealistic” on pricing
Despite the positive news about UK city house prices having reached pre-crisis levels, the report warned that sellers must be realistic about the prices they can expect to achieve.
It stated that: “We expect city level house price growth to remain in line with current levels. There is a danger that, in areas where market conditions have been weak over recent years, would-be sellers, reading the headlines of a bounce in demand and a firming in prices, may get ahead of themselves and become unrealistic on pricing.
“This would impact sales rates and sales volumes. It is most likely to be an issue in London and other cities in southern England where changes in demand can feed quickly and disproportionately into prices.”
House price growth in UK cities nears three-year high