House price growth shifts beyond the big cities

House price growth in commuter areas is outpacing the cities they surround, new research suggests. London has recorded the widest gap.

Yopa compared annual house price growth across 12 major UK cities with growth in their surrounding commuter areas.

In every city analysed, the commuter belt performed more strongly than the urban centre.

The biggest divide was recorded in London. Prices in the capital have fallen by 3.7% over the past year. By contrast, values across its commuter belt increased by an average of 0.9%. That represents a 4.6 percentage point gap.

Cardiff recorded the second-largest difference. City prices rose by 2.9%, while surrounding commuter areas recorded average growth of 6.7%. The gap was 3.8 percentage points.

In Nottingham, prices fell by 0.7% within the city. They increased by an average of 2.4% across its commuter belt.

Birmingham showed a similar pattern. City prices fell by 0.3%, while surrounding areas recorded growth of 2.6%.

The trend also extended to some of the UK’s larger northern cities. Glasgow’s commuter areas recorded average growth of 5%, compared with 2.5% in the city.

In Manchester, surrounding areas saw prices rise by 2.7%. That compares with growth of just 0.5% within the city.

Commuter areas around Sheffield and Newcastle also outperformed. The respective gaps stood at 2 and 1.9 percentage points.

However, the difference was considerably narrower elsewhere.

Bristol house prices increased by 2.2%, compared with 3.2% in surrounding areas. Liverpool recorded growth of 4.8% within the city and 5.1% across its commuter belt.

Leeds had the smallest difference among the 12 cities analysed. Prices increased by 3.7% in the city and 3.8% in surrounding areas.

The figures suggest commuter locations are generally recording stronger price growth than their neighbouring cities. However, the scale of the difference varies significantly between markets.

Verona Frankish, CEO of Yopa, commented: “Higher mortgage rates have put far greater pressure on buyer affordability in recent years and, while the borrowing landscape has improved, buyers are still having to think carefully about where and how they spend their money.

“For many, stretching their budget to remain within their favourite city may have been achievable when mortgage rates were at historic lows, but today that same decision comes with a considerably higher monthly cost.

“As a result, the commuter belt can provide the next best option, allowing buyers to remain within reach of the city they know and love, while potentially securing more home for their money or simply purchasing at a price that better suits their current borrowing power.

“Our research certainly suggests that these surrounding markets are holding their own, with house price growth across the commuter belt outperforming the city itself in every major city we analysed.

“Of course, this doesn’t mean buyers are turning their backs on city living and in places such as Leeds and Liverpool there is very little between the two markets. But with affordability remaining a key consideration, it’s easy to see why the commuter belt continues to appeal to those who want the best of both worlds.”