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First-time Buyers

UK cities still behind house price peaks

Adam Williams
Written By:
Adam Williams
Posted:
Updated:
22/05/2015

House prices in 11 major UK cities are yet to recover to their pre-crash levels, the Hometrack house price index has shown.

The firm tracked data from 20 of the UK’s biggest cities and found 11 have yet to pass their 2007 house price peak.

It found prices in Belfast, Birmingham, Edinburgh, Glasgow, Leeds, Leicester, Liverpool, Manchester, Newcastle, Nottingham and Sheffield had yet to recover. Belfast has been the worst performer in the last eight years with prices down 49%, despite a small uplift in recent times.

London and Cambridge have both seen price growth of around 35% in the same period while Aberdeen, Bournemouth, Bristol, Cardiff, Oxford, Portsmouth and Southampton have all increased prices.

All 20 cities had higher house prices than a year ago although figures varied dramatically. Prices in London have leapt 11% in the last 12 months compared to 3.4% in Liverpool.

Problems with the supply chain were also highlighted in the report. High moving costs and an inability or unwillingness to take on debt meant more people were staying in their current home. This has ramifications across the housing market and has driven prices upwards.

“Housing demand has been spurred by record low mortgage rates and an improving economic outlook encouraging more buyers to enter the market,” the report said.

“This, together with changes to stamp duty announced in December, has sustained the level of house price inflation across the 20 cities.

“The boost to buying power afforded by low mortgage rates, and the knock on impact for house prices, cannot be understated. Average mortgage rates today (2.7%) are more than half the level at the end of 2007 (6%) when the financial crisis hit. Low mortgage rates have been filtering into pricing levels as the economic outlook improves.

“This has been most evident in London and other cities in southern England. House prices in London are 35% higher than they were in 2007. There is plenty more capacity for catch-up in house prices. Across 11 of the twenty cities, average house prices are still lower than in 2007 by as much as 15% in Liverpool and 49% in Belfast.”