The latest headlines generated from the Hometrack UK Cities House Price Index show that the rate of house price inflation was down to 5.3% in July 2017, as opposed to growth of 7.4% which was recorded in July 2016. Understandably, this might be a cause for concern for homeowners or investors who are seeing the value of their home growing more slowly than before. However, it is worth taking a deeper look at the numbers before surrendering to melancholy.
The main thing to consider is something which always has to be taken into account when looking at the housing market as a whole: London.
Hometrack has recorded that growth in London was a meagre 2.8% in July 2017, a figure which is approximately half that of the average across the whole country. The fact is that London is such a huge market that it exercises an outsized influence on the national averages, and it is important to factor that in when national figures are released. That the average house price in the capital is £494,300 – a figure approximately £280,000 higher than the national average – should be a good indication of how weighty its influence is.
With that in mind, the overall headline of a fall of 2.1% in the pace of year-on-year house price growth should be taken with a pinch of salt. Take London out of the equation and focus on individual regions and the prognosis begins to look a lot healthier.
For instance, Manchester has once again bucked the national trend, recording growth of more than 7% in July compared to the previous year. Really, this is no surprise. The city is the capital of the North West and the unofficial ‘second city’ of the UK. It continues to attract an enormous amount of investment from around the world as well as continuing its journey on the path to becoming an international-class home for business. The city’s world class higher education institutes and affordable lifestyle also contribute to the booming economy, and it is no surprise that people are moving to the city in great numbers. In 2016, JLL predicted that the city would see house price growth of 26.4% by 2021 – this number now looks to be conservative. This is a great time to buy in Manchester, and developments such as X1 Manchester Waters are set to change the face of the city.
Another good example of why diving deeper into the data yields rewards is Sheffield. The Hometrack data shows that the average house price in the city has reached £133,000. This is interesting for two reasons. First of all, it is a significantly cheaper entry point than comparable cities such as Manchester, Liverpool and Leeds. Secondly, Sheffield is on the verge of massive growth. Those who invested in Manchester five years ago will recognise the signs: international businesses such as Boeing, HSBC and McLaren Automotive are investing millions of pounds into the city. The population is predicted to rise rapidly over the next 20 years. Hundreds of millions of pounds are being spent on city centre retail and office developments. The Chinese are investing £1bn into city centre housing, business, hotels and other opportunities. The government is including the city in its biggest infrastructure projects – in this case, the HS2 high speed railway. House prices have increased by more than 20% in the last five years.
It is clear to those who care to look that Sheffield is all set to be the UK’s next big property market, and it is advisable to purchase an apartment in the city sooner rather than later in order to get the most from your money. Buyers looking to get ahead of the game can enquire here about Palatine Gardens, a luxury development only a ten minute walk from the city centre. Not only is it close to public transport and local amenities, but Phase 1 is already in construction. Apartments are available from £94,500, making them more than £35,000 cheaper than the citywide average as reported by Hometrack. This is an investment not to be missed!
Using the above two examples, we can confidently say that reports of slowing house price growth are often simplified versions of much more interesting data and trends. It is always worth peering behind the curtain to get a more complete truth before worrying too much about the supposed decline of the market.