The momentum behind the housing market recovery is shifting away from southern cities including Portsmouth and towards ones like Liverpool, Newcastle, Sheffield and Glasgow, according to a report.
Property analyst Hometrack said that the strong property price growth which has already been seen in cities such as London and Oxford in recent years will restrict the ability of values to increase further in these cities in the medium term.
Average property prices in both these areas are now more than 12 times local annual earnings, which is almost double the UK average of 6.3 times wages.
Hometrack’s analysis shows that the housing markets in many of the UK’s main cities, including London, Portsmouth, Aberdeen, Cambridge, Oxford, Bristol, Cardiff, Manchester and Birmingham, all reached a trough around six years ago, after which time prices started to recover.
By contrast, property prices in Sheffield only started to recover around three years ago, while those in Glasgow, Leeds, Edinburgh, Newcastle and Liverpool have only been in recovery for two years and those in Belfast have been edging up for a little over 18 months.
The cities which only started their housing market recovery a couple of years ago tend to have house prices which are more affordable when compared with earnings, averaging between three and six times local wages, said Hometrack. This could give prices more wriggle-room to push up further.
The average property price in London has piled £144,278 onto its value to reach £405,500 since the market in the capital bottomed out in April 2009.
After London, Oxford and Cambridge have seen the strongest house price growth since values there started to recover, with a typical home buyer in these areas facing paying £100,000 more than they would have done six years ago.
But not all cities where house prices have been recovering for some time have seen strong growth in values over that period. In Manchester and Birmingham for example, property values have grown by around £13,000 over the six years since the recovery started in these areas.
Richard Donnell, director of research at Hometrack, said: “House price growth within cities reflects the strength of their local economies and the demand for housing.
“While Manchester and Birmingham saw prices bottom out in 2009, growth has been more subdued than in other cities where employment growth has been stronger and the influence of the London economy has been greater.
“Elsewhere, house prices continue to rise off a low base as pent-up demand returns to the market, supported by record low mortgage rates, an improving outlook and rising earnings.”
Here are the average house prices in the 20 main cities covered by Hometrack in January, followed by the date that prices in these areas reached a trough and the typical house price gain since the trough was reached:
:: Aberdeen, £197,600, October 2008, £49,459
:: Cambridge, £331,200, January 2009, £108,637
:: Oxford, £338,900, March 2009, £100,470
:: Bristol, £217,000, March 2009, £54,539
:: Bournemouth, £243,100, March 2009, £46,533
:: Southampton, £190,400, March 2009, £36,997
:: Nottingham, £128,700, March 2009, £17,704
:: London, £405,500, April 2009, £144,278
:: Portsmouth, £195,200, April 2009, £37,582
:: Cardiff, £180,100, April 2009, £30,433
:: Leicester, £144,200, April 2009, £20,021
:: Manchester, £136,800, April 2009, £13,161
:: Birmingham, £133,400, May 2009, £13,006
:: Sheffield, £126,900, November 2011, £11,947
:: Glasgow, £108,700, July 2012, £6,482
:: Leeds, £139,900, October 2012, £12,886
:: Edinburgh, £189,000, November 2012, £17,416
:: Newcastle, £122,100, January 2013, £9,021
:: Liverpool, £108,700, January 2013, £7,857
:: Belfast, £115,600, June 2013, £12,528