UK city house price growth has picked up to 2.9% supported by a 1% increase in London house prices, the October Zoopla UK Cities House Price Index has revealed.
Prices have risen by 1% in London over the past year, the highest rate of growth for two years, following a period of year-on-year price falls.
Richard Donnell, research and insight director at Zoopla, said: “After a three-year repricing process accompanied by a sizable decline in housing sales, the London housing market is finally showing signs of life.
“The shift in momentum is clear, resulting from a lack of supply, increased sales and more realistic pricing, which bode well for higher sales activity in 2020, rather than a pick-up in house price growth.
“While the London housing market has been in the doldrums, market conditions in regional cities have been stronger over the last two years with demand supported by employment growth and attractive housing affordability.
“The rate of growth is slowing, and all cities are registering annual growth of less than 5%.
“The announcement of the General Election has brought forward the usual seasonal slowdown, but the last few weeks of the year pre-Christmas tend to be much quieter than after Boxing Day, when consumer interest in housing springs back to life.”
House prices are now registering month-on-month price falls in less than a quarter of London’s housing markets, a huge drop from the 85% of markets registering price falls a year ago.
Over three quarters of London’s homes are in markets registering small month-on-month price increases, which have lifted the overall annual growth rate to 1%.
The shift in London house price momentum is down to a decrease in the number of new properties for sale, which has restricted supply.
This is a trend that has been developing for the last 12 months and has been accelerated by the announcement of the General Election on 12 December.
In addition, there has been a notable increase in the number of sales agreed per agency branch in London.
While this increase is off a low base, it indicates that there is renewed demand for housing in London after a sizable drop in sales volumes over the past three years.
Despite London’s housing market having been through an extended slowdown, accompanied by lower sales, large regional cities are starting to show signs of slower growth.
House price growth since the start of 2017 has exceeded 15% across Edinburgh, Leicester, Manchester and Birmingham, but the pace of growth is slowing.
North of the border, house price growth remains steady in Edinburgh and Glasgow at 4.0% and 2.6% respectively.