U.K.'s Regions See House Prices Drive Higher, Despite Brexit

(Bloomberg) -- London’s decade-long housing boom may have been cooled by Brexit, but the property market in the rest of the U.K. is largely shrugging it off.

While home prices in the capital have risen only 1.7 percent since the June 2016 vote, those in Birmingham, Britain’s second-biggest city, have jumped almost 15 percent, according to Hometrack. Manchester is close behind with a rise of 14 percent. The only city where values have fallen over the past 2 1/2 years is Aberdeen.

“Households in regional cities are still taking advantage of low mortgage rates and rising employment to bid up the cost of housing, shrugging off uncertainty around the economic outlook,” said Richard Donnell, director of research and insight at Hometrack. “The discounts from asking prices in the regions continue to narrow, suggesting further upward pressure on values in the near future.”

The regions don’t have to contend with issues of affordability and stamp-duty increases to the same extent as London, where a slowdown that was already underway has been compounded by the uncertainty surrounding Britain’s future relationship with the European Union, Donnell said.

Home prices in the capital have surged 84 percent since 2009, galloping ahead of wages and meaning that the average Londoner now needs 14.5 times their annual income to buy a home. Saving for a deposit to purchase a house in the capital is especially hard, given that rental values are almost 75 percent higher than the U.K. average.

Those factors, combined with more stringent lending criteria and economic and political uncertainty, have caused London home sales to fall by almost a fifth since 2014.

--With assistance from Zoe Schneeweiss.

To contact the reporter on this story: Sharon Smyth in London at ssmyth2@bloomberg.net

To contact the editors responsible for this story: Sree Vidya Bhaktavatsalam at sbhaktavatsa@bloomberg.net, Paul Armstrong, Keith Campbell

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