London house prices have seen their highest growth in three years, a newly published report from Zoopla has revealed.
According to the October Zoopla UK Cities House Price Index, the rate of growth in London increased to 1% annually, up from -1.1% a year prior.
This is the highest rate of growth in London since May 2017, following a period of year on year price falls in the capital city.
Zoopla’s report also revealed only 23% of London postcodes registered negative house price growth over the past month, marking a stark difference to the 82% of postcodes that registered price falls only a year ago.
There was also an increase in the number of sales agreed per agency branch, which indicates a “renewed demand for housing in London after a sizeable drop in sales volumes over the last three years”.
Zoopla said: “The shift in London house price momentum is down to a decrease in the number of new properties for sale, which has restricted supply. This is a trend that has been developing for the last 12 months and has been accelerated by the announcement of the election on 12th December.”
Improved market conditions in London were also helped by more realistic pricing. In 2016, Zoopla recorded a 20% gap between the price of new listings coming to the market and the price of property being marked as sold. This gap now sits at 5%.
In the past quarter, however, house price growth across all UK cities was below 5% for the first time since November 2012.
The average UK city house price growth was 2.9%, ranging between 4.7% in Leicester and -5.9% in Aberdeen.
Edinburgh, Leicester, Manchester and Birmingham posted a growth in excess of 15% since the start of 2017, though this pace is expected to moderate next year onwards.
Richard Donnell, research and insight director at Zoopla, said: “After a three-year repricing process accompanied by a sizable decline in housing sales, the London housing market is finally showing signs of life.
“The shift in momentum is clear, resulting from a lack of supply, increased sales and more realistic pricing, which bode well for higher sales activity in 2020, rather than a pick-up in house price growth.”
He added: “While the London housing market has been in the doldrums, market conditions in regional cities have been stronger over the last two years with demand supported by employment growth and attractive housing affordability.
“The announcement of the general election has brought forward the usual seasonal slowdown, but the last few weeks of the year pre-Christmas tend to be much quieter than after Boxing Day, when consumer interest in housing springs back to life.”