The property market in 2019 is forecast to be lethargic at best. House prices in some areas of London and the south of England are set to fall, while transactions continue to slow amid ongoing Brexit uncertainty.
But there are some parts of England and Wales that will buck those trends. Research by property analysis firm Hometrack, shared exclusively with the Telegraph, has identified hotspots where house prices are likely to rise the most in the coming year.
Areas outside the south and east of England came out on top, with growth in the West Midlands, East Midlands and Wales expected to outstrip the rest of the country.
“There's a housing cycle unfolding, and different places are in different stages of it,” said Richard Donnell, head of research at Hometrack. “In London, the highs of 2014/15 feel well and truly over, and now growth is flat to falling.
“It's not across the country: there are whole areas where the house price growth level is above average, and there is an increase in earnings, employment levels are rising, mortgage rates are low, and people feel confident to buy. Most of these places are outside south-east England.”
Analysts at Hometrack created a formula using metrics such as the time it takes for property to sell, the ratio between initial asking price and final sales price, and the levels of house price inflation in the last year and since the crash. They then ranked local authorities by how much potential the property market has to grow in value in 2019.
See below for a list of the top 20 hotspots for 2019.
“The markets that might be strong are where the gap between the asking and sale price is narrow. That shows the strength in the market,” said Donnell. “That's also the case in the areas where time to sell is relatively quick.
“If I was looking for where would have a stronger market next year, I'd look for the places ending the year with momentum, where buyers can only get a narrow discount to asking price. This indicates where there is a strong underlying demand for housing.”
Many areas on the list were in the Midlands, such as Sandwell, Nuneaton, Nottingham and Coventry, which are near strong economies where jobs are being created. This is particularly important in this slower, uncertain property market as typically most of the people moving are those who need to for jobs or to accommodate a growing family.
“The hotspots are largely where commuters are finding value for money, where people go next after the first part of market [becomes unaffordable],” added Donnell. “When Warwick gets expensive, where do people go next? It's one way of looking at the ripple effect.”
Another area on the list is Kettering, which is a commuter hotspot on a fast train line to London. It is increasingly the target of families priced out of the capital.
Other locations identified by the research had specific reasons why its property market would outperform in 2019. Newport, in Gwent, came top of the list due to the toll on the Severn Bridge being scrapped. This makes it cheaper to commute from Bristol, creating more demand for the affordable homes in the area.
The scrapping of the toll on the Severn Bridge has boosted the property market in Newport, on the Welsh side, where house prices are predicted to grow in 2019 CREDIT:PA
Also on the list in the South West are some more unlikely hotspots, where prices are recovering off a low base. West Somerset and Torridge in north Devon have “better market fundamentals” than more expensive areas in the south of their respective counties, said Donnell. “It's because it has better value for money and therefore better prospects. When there's a cycle, markets recover top down.”
2019's top 20 property hotspots
- Newport, Gwent
- Sandwell, West Midlands
- Wyre Forest, Worcestershire
- Nuneaton and Bedworth, Warwickshire
- Nottingham, East Midlands
- Erewash, Derbyshire
- Blaby, Leicestershire
- Coventry, West Midlands
- Dudley, West Midlands
- North Lincolnshire
- Birmingham, West Midlands
- Wychavon, Worcestershire
- West Somerset
- Kettering, Northamptonshire
- Gedling, Nottinghamshire
- Staffordshire Moorlands
- Torridge, Devon
- North East Derbyshire
- Torfaen, Monmouthshire
- Rotherham, South Yorkshire