Weaker market conditions mean cities house price inflation has slowed to 1.7%. As affordability pressures grow, London's weak growth spreads across southern England. Sales volumes in southern cities are 13% lower than in 2015. Conversely, sales volumes are 19% higher than 2015 in regional cities. The cities registering the highest rate of growth at present are those where recovery in prices since 2008 has been weakest.

Price growth weakens across southern England

UK city house price inflation has slowed to 1.7%, the weakest growth since May 2012. Weaker market conditions are spreading out from London into cities across southern England as affordability pressures grow and moving costs increase.

All six cities covered by the index in southern England, outside London, are recording the lowest growth rates since 2012 – ranging from -0.6% in Oxford to +2.2% in Bristol (Fig.1).

Weaker demand as sales volumes fall 13% since 2015

Demand for housing in southern cities has weakened, evidenced by falling sales volumes, and this has resulted in lower levels of house price growth.

Our latest analysis of city level housing transactions shows sales volumes down by an average of 13% across southern cities since 2015. (Fig.2). Sales are down by 20% in Cambridge, in line with the decline in London, and by 12% to 13% in Portsmouth and Bournemouth.

High price growth eventually results in lower sales

Falling sales volumes after a prolonged period of high house price growth is part and parcel of the unfolding housing cycle. The reality is that the more house prices increase over time, the more buyers are priced out of the market through a mix of affordability factors and higher moving costs.

Figure 3 shows the relationship between price growth since 2008 and the change in sales since 2015. It shows cities with the greatest increase in house prices have registered a steeper decline in sales since 2015 - the year with the highest overall sales since 2007.