House price growth set to cool to 3% in 2020

House prices across UK cities house prices are set to grow by 3% next year, according to analysis by Zoopla, a slip on the average growth recorded over the past decade. The online listings business said that the average price of a house in UK cities had risen by £90,000 over the past decade, a 4.4% annual rise and total increase of 54% . Average London house prices increase by £204,400 over past decade – a 74% increase – while prices in Aberdeen and Belfast remain virtually unchanged. Aberdeen fell victim to the oil price crash post 2015, and Belfast, having registered six years of house price falls between 2007 and 2013, was the last city to register a sustained recovery in house prices. The variation in house price growth over the past decade has had a direct impact on housing affordability, which varies widely across UK cities. The least affordable city is London, where average prices are 12.7 times earnings, while the most affordable is Glasgow, where prices are 3.7 times average earnings. Richard Donnell, research and insight director at Zoopla, said: “While we expect some pent-up demand to return to the market in Q1 2020, the affordability of housing across the country will dictate the level to which prices will increase in 2020. Lower mortgage rates have already been reflected in higher house prices, which means house prices are set to rise at a lower rate in future – more in line with average earnings. We expect UK city house prices to increase by 3% over 2020. “That said, the most affordable regional cities still have some headroom for growth, and we expect them to register price growth of up to 4%. Growth will remain more muted in southern England despite modest improvements in affordability. We expect a limited boost to sales volumes in London over 2020, but for price growth to be constrained by affordability factors, with London prices expected to rise by 2% over the year. “ He added: “Looking back over the last decade, lower mortgage rates and rising incomes explain most of the increase in house prices – rather than any unsustainable increased spending on housing, which has been limited by mortgage regulation. At the same time, the housing market has become less liquid – a result of economic factors and demographic change, which has been compounded by higher levels of stamp duty, and which is a barrier to movement, especially in southern England. “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.” According to Zoopla’s November UK Cities House Price Index,  annual growth for 2019 is around 3.4% with current house price growth at a city level ranging from 5.4% in Edinburgh to -0.7% in Aberdeen.   To send feedback, e-mail samantha.mcclary@egi.co.uk or tweet @samanthamcclary or @estatesgazette