House price growth in London is showing signs of firming up following a period in the doldrums, according to a report.
Less than a quarter (23%) of London postcodes have registered negative house price growth in October, down from 82% registering price falls a year ago, according to Zoopla.
But the rate of annual growth in property values is slowing across the UK’s major cities generally.
Annual house price growth in every city covered by the index has now been running below 5% for three months in a row – in August, September and October.
The last time there was a three-month run of annual price growth below 5% in all 20 cities covered by the index was in 2012. It happened during September, October and November in that year.
The latest report showed annual house price growth in October ranged from 4.7% in Leicester to minus 5.9% in Aberdeen.
The October report marks the four-year anniversary of consecutive year-on-year house price falls in Aberdeen, prompted by a collapse in the oil price in 2015, Zoopla said.
Meanwhile, across London, house prices increased by 1% annually in October.
This is the highest rate of growth for London for two years, following a period of year-on-year price falls, Zoopla said.
A year earlier, house prices in London were falling by 1.1% annually.
House prices in London recovered more quickly following the financial downturn than in many other parts of the UK.
But as housing affordability became more stretched in London other more affordable areas have seen stronger house price growth by comparison.
Zoopla said 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 forthcoming General Election, it said.
Zoopla also said there had been a “notable increase” in the number of sales agreed per agency branch – indicating renewed demand for housing in London after falling sales volumes over the past three years.
There are also signs that house sellers’ expectations are becoming more realistic.
In early 2016, when buyer demand in London started to weaken, the market grappled with a 20% gap between the price of new listings coming to the market for sale and the price of property being marked as sold on Zoopla.
The gap between asking and selling prices has been steadily narrowing it said – which should help support London house sales during 2020.
Richard Donnell, research and insight director at Zoopla, said: “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.”
Here are average house prices in October followed by the annual change in prices, according to Zoopla:
– Leicester, £180,000, 4.7%
– Manchester, £172,500, 4.6%
– Liverpool, £122,300, 4.1%
– Edinburgh, £236,700, 4.0%
– Belfast, £137,600, 4.0%
– Birmingham, £167,000, 3.5%
– Nottingham, £156,700, 3.4%
– Leeds, £167,800, 3.4%
– Cardiff, £210,100, 3.1%
– Sheffield, £138,400, 3.1%
– Bristol, £282,800, 3.0%
– Newcastle, £129,100, 2.7%
– Glasgow, £123,200, 2.6%
– Cambridge, £414,000, 2.2%
– Bournemouth, £289,800, 2.1%
– Portsmouth, £238,600, 1.2%
– Southampton, £227,900, 1.2%
– London, £476,900, 1.0%
– Oxford, £412,200, 0.0%
– Aberdeen, £154,100, minus 5.9%
By Vicky Shaw
Source: Yahoo Finance UK