– Overall city level house price inflation increased to 11.0% in February up from 8.1% a year ago
-Portsmouth, Nottingham and Birmingham have seen highest rates of annual house price growth for over a decade
– London, Bristol, Oxford and Cambridge continue to record double digit growth but signs that the rate of growth is slowing
February saw a notable and unseasonal acceleration in house price growth across UK cities according to the latest Hometrack UK Cities House Price Index. Overall city level house price inflation increased to 11.0% up from 8.1% a year ago, the highest annual rate of growth for almost 18 months.
Portsmouth, Nottingham and Birmingham recorded the highest rate of annual house price growth for over 10 years while Leeds and Glasgow have seen the highest rate for over 8 years. All these cities have experienced sustained house price inflation since 2013 largely due to the improving economic conditions, rising earnings and employment levels with affordability boosted by low mortgage rates.
London, Bristol, Oxford and Cambridge all continue to record double digit rates of house price inflation. However, there are early signs that the rate of growth is starting to slow. All these cities recorded a small drop in the headline rate of growth over February as affordability and sentiment factors start to impact pricing levels. In fact, a closer analysis of the 46 local authorities that cover the London City area shows the average growth rate in the last quarter is approaching half the rate recorded over the last 12 months.
Richard Donnell, Insight Director at Hometrack says:
“There has been a notable and unseasonal acceleration in city level house price growth in the last three months. 16 of the 20 cities covered by our index are registering an annual rate of house price growth that is higher than 12 months ago. As the housing recovery spreads some regional cities are recording their highest growth rates for over a decade. Four cities have seen the rate of growth slow, with Aberdeen and Belfast hardest hit. Belfast in particular has lost momentum where a modest recovery appears to have stalled with house prices still 45% down on their 2007 levels”
“While there is a lot of focus on the impact of investors buying ahead of the April stamp duty deadline the vast majority of demand for housing comes from existing homeowners who account for 80% of sales. The pick-up in growth across the UK cities has more to do with a lack of supply and increased demand on the back of the improving economic outlook and low mortgage rates.”
“Our latest index results show that there are early signs of a slowdown in the double digit growth cities of London, Oxford, Cambridge and Bristol as affordability pressures constrain demand, buyers become increasingly price sensitive. Policy changes affecting investors will bite harder over the course of the year impacting volumes and the level of price appreciation.”