UK

Manchester Leads House Price Growth Over Last 12 Months

As the fastest-growing housing market in England, Manchester remains a beacon of opportunity for discerning investors. We discuss what's driving growth in Manchester's property market and explore how house prices are faring across the rest of the UK.

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Manchester posted the strongest house price growth in England in the twelve months to May, according to Zoopla. The Northern city saw a 1.6% annual change in house prices. While modest, this rate of growth is the highest in the country.

Looking at the whole of the UK, Manchester’s house price inflation was beaten only by Belfast, which recorded a 3.4% increase in property values. Other UK cities to make the top 5 were Sheffield (1.3%), Glasgow (1.3%), and Cardiff (1.2%).

In recent years, Manchester has surged in popularity among homebuyers and investors. With a booming local economy, strong employment market, and affordable property prices compared to the likes of London, the city is becoming an increasingly popular place to live, work and invest. From trendy regeneration areas like Ancoats to the bustling waterside Media City, Manchester is brimming with vibrant neighbourhoods where residents can enjoy a high quality of life and dynamic urban lifestyle. High demand for housing and rental properties in Manchester is not only driving house price growth but also unlocking further opportunities for investors seeking substantial returns.

What’s Happening With House Prices Across the UK?

In recent years, soaring inflation and high borrowing costs have dampened UK housing market activity and moderated growth. While Manchester has emerged as one of the country’s strongest markets, the rate of annual change in house prices fell year-on-year, down from 2.6% in May 2023. This trend is consistent across all cities in the index.

Half of the 20 cities surveyed experienced negative house price growth in the twelve months to May, including Nottingham, Leicester and Aberdeen. The remaining cities to see house prices slide were all located in the South of England. In London, property values fell -0.4%, while Bournemouth recorded the largest price drop of -1.5% over the year.

However, improving sales volumes over the first half of the year are creating a more stable market and sparking renewed optimism. With a fifth more homes on the market this month compared to last year, there is not only more choice for buyers, but also greater demand driven by new sellers who are also looking to move. Demand for properties for sale is up by 6% while sales agreed are up 8% annually. Since January, house prices have risen on a month-to-month basis across every region of the UK.

The annual rate of house price inflation is now static, averaging at 0% in May (Zoopla). Rightmove also recorded static growth in June based on asking prices set by UK sellers.

Experts are not expecting UK house price growth to gain momentum any time soon, particularly as we enter the “summer slowdown” period and lead up to the general election. That said, an interest rate cut—translating to more attractive mortgage deals—would bring more buyers to the market, driving demand and putting upward pressure on prices.

Last month, UK inflation fell to the Bank of England’s 2% target, its lowest level in nearly three years. This is down from a rate of over 11% in the autumn of 2022. Since November 2021, the BoE has implemented 14 consecutive interest rate hikes, raising the base rate to 5.25% in a bid to curb inflation. Having recently reached its target, the BoE is expected to cut interest rates, perhaps at the next meeting in August.

Richard Donnell, executive director at Zoopla said:

The timing of the first cut in the base rate [by the Bank of England] is a key moment and will give a boost to both market sentiment and sales activity.

To conclude, the UK housing market is beginning to see an uptick in activity and shoots of optimism as we move through 2024. The first half of the year has been characterised by recovering sales figures and greater supply, with more buyers and sellers deciding to make their move. This has supported house price growth across the UK—particularly in Northern cities like Manchester—with the exception of more expensive markets further south. In these cities across the South of England, affordability pressures continue to weigh heavy on homeowners and prospective buyers, tempering demand.

With inflation down to its 2% target and a rate cut on the cards, many buyers are anticipating more attractive deals to enter the mortgage market by the end of 2024. At this point, the UK housing market will likely see a surge in activity and more robust house price growth across all regions.

The fact Manchester has demonstrated resilience during turbulent times underscores its investment appeal and points towards a bright, prosperous future for the city. The region’s increasing popularity, innovative infrastructure and regeneration projects, and ongoing luxury residential boom will continue to drive demand and house price growth while unlocking new opportunities for investors. As London and cities across the South of England wait for house prices to rebound, Manchester continues to forge ahead as the fastest-growing housing market in England.

 


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