The “scarcity” of property in key regional cities such as Manchester is also supporting “above average capital growth”.
- Average property prices in the UK continue to rise fastest in key regional cities outside of London
- Edinburgh, Nottingham and Manchester witnessed the strongest levels of capital in the 12 months to March 2017, with growth in London registering just 1.6%
- These cities are also seeing sales levels match supply levels, with this “scarcity” driving performance for investors
Investors looking for the best locations for capital growth in the UK’s residential property market should continue to look outside of London.
According to the latest index from HomeTrack, which analyses 20 cities across the country, key regional locations continue to post the sharpest increases in average property prices annually. Prices in Edinburgh increased by 8.1% in the 12 months to March 2018, followed by Nottingham (8%) and Manchester (7.4%).
In comparison, growth in London hit just 1.6%. While HomeTrack does not anticipate prices will fall in the city any time soon, it did indicate that London’s market is more inflated than those in other UK locations. 1.5 homes come onto the London market for every sale, while it also has the longest selling period nationally at 17 weeks.
The picture is different elsewhere. In regional hotspots, the undersupply of property means that new properties coming onto the market are often sold in a relatively short period of time, one of the biggest drivers of investment performance.
The HomeTrack report outlines: “In cities where house price growth is above average, we find that new supply is broadly in line with sales. The ratio of sales to new supply is around one to 1.1 times in Manchester, Birmingham, Edinburgh and Glasgow. This creates scarcity and, together with attractive affordability levels, supports above average capital growth.”
Despite being one of the UK’s fastest growing economies and populations, property supply in Manchester cannot keep up with demand. Figures suggest its population is growing at 15 times the rate new homes are currently being built at, with residential housing delivery in Manchester likely to meet just 25% of annual demand based on current projections.