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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.
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
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.
Regional cities continue to drive headline house price growth while in London there are signs that the downward pressure on prices is starting to ease on a seasonal increase in activity.
The divergence in house price growth between southern England and regional cities continues with overall HPI at 5.2%. London growth remains slow at +1%, and the greatest downward pressure on prices is being registered in inner London.
The divergence in house price growth between southern England and regional cities continues, with overall HPI at 5.2%. London growth remains slow at +1%.
There has been continued growth in large regional cities, despite house price inflation slowing to 5.4%. ZPG listings data shows discounts to asking prices are narrowing, indicating market conditions are improving across cities outside south eastern England. Increased discounting can be seen in London, where price growth has slowed to +1.8%.