Demand from buyers soars 26% as house price growth reaches two-year high.

House prices increased by 3.9% year-on-year; the highest rate recorded since September 2017. This welcome boost to the property industry is revealed in our monthly Zoopla UK Cities House Price Index.

 

 

Traditionally, the Christmas and New Year period is a time when homebuyers start searching for new homes. But our analysis found demand from buyers in the first weeks of 2020 (23 December 2019 - 19 January 2020) was 26% higher than the same four-week period in 2019 and 2018.

With the exception of Belfast, every UK city recorded an increase in demand from buyers over this time. 

Richard Donnell, our research and insight director, said: "Whilst the first few weeks of the year always see a return of home buyers to the housing market, demand for housing at the start of 2020 is 26% higher than over the last two years.

"This is partially due to fading political uncertainty; households who were holding off moving are now starting to return to the market and this momentum has been supported by low mortgage rates.

"The cities with more affordable house prices, such as Sheffield and Leeds, have seen the greatest increase in buyer demand as house hunters continue to focus on value for money this year."

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Where is growth strongest?

House price growth continued to be strongest in parts of Scotland, northern England and the Midlands, where property still remains affordable.

Edinburgh saw the biggest house price rise with an impressive 6.1% year-on-year. The average price of a home in the Scottish capital is £242,000. Nottingham was the second city in our chart with prices rising by 5.2% and an average current home price of £159,600.

Nottingham is also ranked as our number one prospect for house growth this year. We use a range of metrics - including property affordability, position in the current housing cycle, discounts to asking price and the time it takes to sell - to rank cities with the best prospects for house price inflation this year.

Which cities saw the weakest growth?

Homes in Aberdeen lost 3.1% of their value during the past year, as the housing market in the city continued to struggle following the collapse in the oil price.

In Oxford, house prices eased 0.1% lower, while they edged ahead by just 0.6% in Southampton.

Growth of below 2% was also recorded in Newcastle, Cambridge, Portsmouth and London.

Despite the wide regional variations, the gap between the best and worst performing cities has narrowed slightly during 2019, dropping to 9.2%, compared with 13.5% at the start of 2018.

What’s the outlook for 2020?

Richard Donnell said: "Regional cities continue to lead the way for house price inflation this year thanks to continued economic growth and more attractive affordability of housing.

"The best prospects for house price growth in 2020 are in Nottingham, Edinburgh, Glasgow and Manchester.

"In contrast, we expect cities in southern England to register below average price growth as affordability levels realign to what buyers can afford.

"Overall, we are expecting house prices to grow on average by +3% across all UK Cities in 2020."

London ranks 16th overall in terms of predicted growth, with sales volumes likely to rise faster than prices. 

 

Top 3 takeaways

  • House price growth hit a two-year high in December driven by a strong bounce in demand

  • The average cost of a home in one of the UK’s major cities stood at £257,527 during the month, a 3.9% year-on-year increase

  • There continues to be a marked north-south divide in the market, with significant variations in price growth across different regions


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