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Regional Cities Set to Lead House Price Gains in the U.K.

Areas outside London were strongest this year, and that trend is expected to continue

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Newcastle, North East England

georgeclerk/Getty Images
Newcastle, North East England
georgeclerk/Getty Images

Over the next five years, house prices in the U.K. are expected to rise 14.2%, according to Knight Frank's five-year house price forecast released Monday.

Though house price growth in the U.K. has been slowing since the summer of 2014, the report said, the annual change in the nation remains positive. Price growth in the U.K. totaled 1.5% in 2017, and it’s predicted to be 1.0% in 2018, the report said.

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On a regional level, the North West of England—home to large cities like Liverpool and Manchester—is slated to see the biggest long-term price growth with an increase of 16.4% by 2022, according to the report. This past year though, the East and West Midlands, which includes cities like Birmingham and Nottingham, saw the biggest boost with both seeing prices rise by 4.5%.

Regional cities have emerged as strong markets this year, with job growth and affordability seen as two of the primary causes for the boost in demand—and in turn, increasing prices—for housing.

Last week, Birmingham’s B16 postcode, ranked No. 1 in a report from Barclays which identified the most thriving postcodes in the U.K.’s top 20 cities. The average house price in the area rose in July 2017 to £171,498 (US$226,791) from last year’s £147,121 (US$194,582), a 17% price bump.

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London is the only region in the U.K. that saw a drop in prices in 2017 with a fall of 1.0%, according to the Knight Frank report. Next year, the capital is expected to see a smaller decline of 0.5%. By 2022, overall prices in the city are slated to have risen 13.1%, one of the smallest regional growths predicted by the report.