Faulty Towers? City centre housing markets in the UK

The national housing market is at a critical juncture. For several years, commentators have been debating what will happen when house prices stop increasing. Now we are about to find out. Are price rises unsustainable - part of a housing bubble that is set to burst, sending the market spiralling downwards? Or has the rapid growth in house prices been built on firm foundations, providing a much softer landing?

This has important implications for city centres. If the pessimists are right, prices are going to fall and the downturn is going to hit city centre markets particularly hard. If the optimists have it, no significant adjustment is necessary to bring prices into line with their long term values. City centre markets will remain a good investment over the next few years.

The evidence suggests that the national housing market is overvalued, but not to the degree some suggest. Over the past ten years, the property market has helped make city centres happening places. Over the next five years, this will not be the case. In the long-term, city centre housing markets will prosper

again. But they will always be volatile.

This paper draws extensively on the quantitative and qualitative research undertaken for City People, which draws on the experiences of Manchester, Liverpool and Dundee. It provides a detailed understanding of the demand for city centre living in Britain.

Centre for Cities has re-launched as an independent think tank. You can visit them online at http://www.centreforcities.org.