House prices in UK cities hit three-year high

The latest Zoopla report evaluates the latest winners and losers in the UK residential property market. Which cities come out on top - and why?

David Sapsted

26 February 2020

With the exception of Aberdeen and Belfast, house prices across the UK's 20 major cities have risen above their 2007 pre-crisis peaks for the first time, according to a new survey.The report from property portal Zoopla, based on Land Registry data and mortgage valuations, said that, last month, Newcastle became the final city in England to surpass the price landmark, 12 years after the financial crisis hit.Zoopla said that, by contrast, prices in central London had taken just two and a half years after the crisis to rebound, mainly as a result of overseas buyers entering the market after a major fall in the value of sterling against the dollar.

University cities win in the house price boom, while Aberdeen and Belfast still have not recovered

In the university cities of Oxford and Cambridge, property values surpassed their pre-crisis peaks within four years, while in Bristol it took just over five years.The market in Aberdeen, meanwhile, continues to feel the effects of the collapse in oil prices while Belfast has still not recovered from a boom-and-bust cycle that saw house values tumble between 2007-2013.Zoopla also reported that, last month, annual price growth in the 20 largest cities hit a three-year high of 3.9%. Except for Aberdeen, where prices fell 4.3% year-on-year, all the cities in the index recorded annual house price inflation of at least 2% for the first time since February 2017.The highest growth was in Edinburgh, which saw a 5.9% rise, while Nottingham and Leicester both recorded growth rates of 5.3%.

High demand from would-be UK home buyers

Zoopla also reported small increases in available property on the market in 11 of the cities with stock lower in the remaining nine. Meanwhile, the website recorded a sharp increase in demand from would-be buyers.Richard Donnell, research and insight director 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 over the first half of 2020.

Will the UK continue to experience house-price growth?

“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."Meanwhile, a separate analysis by property website Rightmove found that the average asking price per square metre of 1.2 million homes for sale across England and Wales had reached £2,954, almost a fifth higher than five years ago.Not surprisingly, there were marked regional differences, with the average of £10,000-plus per square metre in areas of London such as Westminster, Paddington, Soho and Notting Hill, comparing with less than £1,500 in Sunderland, Teesside and Blackburn.