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House price growth will be driven by affordability – Zoopla

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  • 23/12/2019
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House price growth will be driven by affordability – Zoopla
Property portal Zoopla has predicted the value of the average home will rise by three per cent next year, driven by “pent-up demand” returning to the market following the general election result.

 

The firm’s latest cities house price index found that the nation’s main cities saw house prices rise by an average of 3.4 per cent over 2019, though this ranged from the 5.4 per cent growth in Edinburgh to the 0.7 per cent drop in Aberdeen.

And it predicted that rather than a ‘Boris bounce’, the scale of house price growth next year will be driven by affordability.

Zoopla noted that the cities included in the index had seen prices jump by 54 per cent over the last decade, though there were significant city differences.

For example, while London, Oxford, Cambridge and other cities in the south had seen substantial house price growth, the likes of Belfast and Aberdeen have an average house price largely unchanged since 2009.

 

South slowing

However, things have slowed in the south, with cities registering price growth much lower than the average over the last five years, while above average price growth is seen in more affordable cities like Glasgow and Liverpool.

And it suggested that cities with a price to earnings ratio of less than six times earnings will see prices jump by up to four per cent next year.

Zoopla also cautioned that lower single digit house price growth is likely to be the “new normal” now that lower mortgage rates have been “largely factored” into house prices.

Richard Donnell (pictured), research and insight director at Zoopla, said that growth will remain “more muted” in the south despite modest improvements to affordability, with a limited boost to sales volumes in the capital.

He added that lower mortgage rates and rising incomes were behind much of the price growth over the last decade, and warned that the market has become less liquid over the same period.

“As we start the next decade in housing, a top priority for the new government is to ensure we look to remove the barriers to households moving home, with housing policy catering to the different market conditions across the country, while increasing housing choice across all tenures,” he concluded.

 

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