All cities, except for Aberdeen, which stands at -4.3%, are recording annual house price inflation of at least 2% per annum, for the first time since February 2017.
City growth is led by highs of +5.9% in Edinburgh, and +5.3% in Nottingham and Leicester.
Price growth varies across the UK, with central London the first market where prices surpassed 2007 levels, with average values reaching their pre-crisis peak in two and a half years, supported in part by overseas buyers entering the market, attracted by a major drop in the value of sterling.
London’s return to form was closely followed by southern cities, which returned to pre-crisis levels within seven years, boosted by rising demand and employment growth.
Meanwhile, Newcastle was the final English city in Zoopla’s UK Cities index to reach this milestone, some 12 years after the financial crisis. Average values in the city surpassed the levels last seen in 2007 in late December 2019.
Zoopla data shows how the supply-demand imbalance is helping to exert upward pressure on prices in some markets.
On the supply side, the stock of homes for sale rose by an average of 2.6% year on year in January 2020. This contrasts with the strong bounce in demand, which was up by 26% over the same period, according to Zoopla data.
Despite the apparent upsurge in supply at a national level, stock levels in nine cities are tracking lower than a year ago by as much as 6%.
Of the three cities registering annual price growth of more than 5%, Edinburgh (5.9%) and Leicester (5.3%) have fewer homes available for sale than a year ago, with stock in Edinburgh down 2%, and Leicester down 6%.
Figure 2: Stock of homes for sale in January 2020 compared to January 2019
Source: Zoopla UK City House Price Index, powered by Hometrack
Richard Donnell, research and insight director at Zoopla, commented: “It has taken twelve years for house prices in all English cities to return to their previous pre-crisis levels. Some cities returned to 2007 levels within four years, as the economy and job growth rebounded. In others, it has taken much longer as the mismatch between demand and supply has been less pronounced.
“An imbalance between supply and demand is supporting the current rate of house price growth - a trend we expect to remain in place over 2020H1. Strong demand and attractive affordability are sustaining above average price growth in Nottingham despite an increase in supply. The same will apply to other cities including Liverpool and Manchester. The growth in supply in Oxford and Cambridge is more likely a result of sellers, who were sitting on their hands waiting for market conditions to improve, before eventually deciding to make their move, encouraged by improving housing market sentiment.
“We do not expect a material acceleration in the rate of growth in the foreseeable future, as affordability pressures will limit the scale of price growth, especially across southern England.
“There is a risk that, in some markets, sellers may become unrealistic about the expected sales price for their home. This is more likely in London and southern England where the market has been weak, and supply remains constrained. Housing demand is up, but there remains a price sensitivity amongst buyers, especially in the highest value markets.
“The upcoming Budget is a prime opportunity for the new Chancellor to address some of the factors affecting the housing market. Any review of stamp duty charges to help the movement of homeowners up and down the property ladder should be made to boost transaction levels, but the extent and nature of any reform, which must be balanced against political exigencies, remains to be seen.”