The latest index from market analysts Hometrack shows a 10.2% average year-on-year growth at city level in June, consolidating a strong first-half for the UK’s property market in 2016.
Analysing activity throughout the first half of 2016, Hometrack found that the rate of house price growth in cities has been strong due to low mortgage rates, an influx of investor demand prior to stamp duty tax increases and a shortage of stock.
However, the research demonstrated that the rate of house price growth within cities is also starting to ‘plateau’ as a result of the EU referendum vote, with June’s average year-on-year growth remaining at the same level as May, at 10.2%.
Bristol remained the fastest growing city with 14.7% year-on-year growth in June, say figures. Other cities like Glasgow, Manchester and Liverpool and Leeds also saw strong growth as they offer relatively affordable properties with ‘above average’ attractive yields.
The index also highlights that time lags in the housing market result in slow-emerging data and, consequently, any trend or directional changes are only noticeable between a 2-3 month timeframe.
In an effort to understand the trajectory of the housing market in the upcoming months, Hometrack observed the volume of supply coming into the market in the 3-months to mid-July 2016 compared to the monthly average over the last year.
Through this analysis, it found that supply in London over the last 3 months had increased 15% more quickly than the yearly average, but 8% fewer homes were sold in the captial.
Conversely, regional cities such as Manchester seeing supply increase and house price growth gain momentum, resulting in a 7% increase in the number of sales made in the city.
The analysis shows that over the referendum period, regional cities have maintained the momentum in sales and house price growth acquired in the months prior.
Whilst Hometrack’s figures provide a snapshot of the UK’s property market over the last quarter, a clear picture is still difficult to gauge following Brexit. However, it is likely that sales volumes and price growth will moderate over the second half of the year, with Rightmove already indicating that asking prices have steadied following the referendum results.