Property survey reveals huge city contrasts
As the engines of the UK economy and as places where young people gather in disproportionate numbers to study and work, cities are naturally a key area for property investment, not least in the private rental sector.
For this reason, the latest Hometrack figures for the 20 principal cities in the UK - which is not the same as the 20 largest by population - are of considerable relevance. They reveal that over the last 12 months prices have increased by 4.9 per cent; above the national average, but less than the five-year mean of 6.9 per cent.
Mind the gap
However, the picture is anything but uniform. London has been notably weak - a situation that has prevailed since the EU referendum - and, perhaps just as relevantly, southern cities as a whole have been outperformed by those in the Midlands, north of England and Scotland.
Even that picture is not absolute. For example, in Scotland, Edinburgh has enjoyed price growth of 7.2 per cent in the last year, the third highest rate in Britain, but Glasgow was below average at 3.8 per cent and Aberdeen was the only city to suffer falling prices.
Blame it on the Brexit '
Of course, the Granite City is also an oil city and its 7.2 per cent plunge is part of an ongoing trend sparked by the slump in the price of Brent Crude. A key question is whether London is also a special case, albeit far less so than Aberdeen due to its much more diverse economy.
The fact that the majority of the capital's inhabitants may feel a little gloomy about Brexit after voting remain is not by itself a sufficient explanation for annual price growth of just 0.8 per cent. After all, Edinburgh voted remain and so too did Manchester, which at 7.7 per cent has enjoyed the fastest growth in the table.
Therefore, it is tempting to focus on the aspect of Brexit that may hurt London most; its threatened position as an international centre for finance and commerce and consequent attractiveness for global property investors. Even here, however, there are question marks. While London struggles, both British and international money continues to pour into Manchester, particularly residential property.
A high-speed route to success?
Some may suggest Manchester is doing well because of its position at the fulcrum of the Northern Powerhouse project, with HS2 also on the way. Indeed, HS2, along with the government's Midlands Engine initiative, could similarly account for Birmingham's above-average growth of 6.8 per cent.
However, these factors could also be attributed to Leeds where, even though the regeneration of areas like Holbeck are evidence of an active property scene, growth was a more modest 4.2 per cent.
Admittedly, however, Leeds suffers by comparison in some respects. It has a limited rail network and the city's failure to get its trolleybus scheme off the ground has come at a time when Manchester and Birmingham are expanding their tram systems.
A market correction stymied by arrogance?
In view of all these variations and contradictions, it may be worth exploring some other possible explanations for contrasting price trends. Perhaps the prime factor at play is not Brexit, tram lines or HS2, but an overdue market correction.
Russell Quirk, founder and CEO of Emoov.co.uk, holds this view. He noted that the market is in a "transitional" phase and many sellers have been adjusting prices downwards to secure a sale.
He added: "This is most prevalent across the southern, more inflated cities and nowhere more so than the capital, where there is almost an arrogance and an expectation that a seller should achieve more than the market is dictating simply because of their geographical location.
"Therefore, the adjustment in price is taking far longer and so transaction levels and in turn, house price growth, are slowing."
If this analysis holds true, it may be that the Midlands and the north will be the best places to invest for some time to come.