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September 2014 - Hometrack House Price Cities Index

On 24 October, 2014
  • Hometrack launches inaugural UK Cities House Price Index to track price trends at a city level.
  • Annual house price inflation across the 20 UK Cities ranges from 18.1% in London to 4.3% in Glasgow. 14 of the 20 cities are growing more slowly than the UK national average rate of 9.0%
  • The recent upward pressure on UK house prices is weakening on the back of slowing growth in the London housing market, where the headline rate of growth has reduced after 18 months of consecutive increases.

Hometrack’s inaugural UK Cities House Price Index reveals average house prices have grown between £61,000 and £5,000 in the 12 months to September 2014. The strongest performing cities are in southern England. In percentage terms, house price growth has ranged from 18.1% in London to 4.3% in Glasgow.

Hometrack’s new city level house price indices track the relative performance of house prices at a city and ‘city region’ level.

All 20 cities covered by the index have registered an increase in the annual rate of house price inflation (fig.1) with the exception of Aberdeen where the market is slowing off a high base.

London and Cambridge are registering the highest rate of annual growth at 18.1% and 17.9% respectively. Glasgow and Leicester are registering the slowest annual growth.

Fourteen of the cities are registering growth below the UK average of 9.0%. All of these cities are outside southern England with the exception of Bournemouth.

Much of the recent recovery in house prices outside the influence of London’s ‘city region’ has occurred in the last 18 months on improved consumer confidence and low mortgage rates.

Table 1: City Level Summary
Source: Hometrack House Price Indices

Pent-up demand has fed back into the market but the rates of growth in most major conurbations outside London are around 5-7% compared to a UK average of 9% which is being influenced by the strength of house price growth in London.

UK house price inflation grew from 8.9% in August to 9.0% in September (fig. 2). The month-on-month rate has slowed since the spring with a 0.4% increase in September compared to 1.0% in April.

The average UK house price has grown over £15,000 in the last 12 months

Fig 1: Annual growth - current v year ago
Source: Hometrack House Price Indices
Fig 2: UK House Price Inflation
Source: Hometrack House Price Indices

The London city index recorded the first fall in the annual rate of growth for 18 months – declining off a high base from 18.9% in August to 18.1% in September. The slowdown has been more marked at a month-on-month level - average house prices in London grew by 0.4% in September, compared to an increase of 2.2% in April.

Other cities exhibiting a slowdown in the annual rate of growth are Oxford, Belfast and Aberdeen. Those where the headline rate of growth is still rising include Edinburgh and Glasgow, both off a low base.

The near term outlook is for a continued slowdown in London, where house prices are almost 30% ahead of 2007 levels. International demand has weakened on a variety of tax changes and a stronger pound. The level of absolute prices and the impact of the mortgage market review are also starting to cool domestic demand for housing.

Across the rest of the cities we expect levels of house price inflation to moderate. While house prices across all cities have bounced back in the last 12 months there is no evidence of any runaway acceleration in house prices. The majority of city housing markets are starting to register a levelling off in the rate of growth.

September 2014 - Hometrack House Price Cities Index
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