Glasgow is the city in which house prices are rising fastest, according to the latest Hometrack UK Cities Price Index.
The Scottish city saw prices rise by 7.9 per cent over the last year, a figure nearly matched by Edinburgh. Scotland’s two largest cities pulled ahead in 2017, with the capital seeing house price inflation run at 7.6 per cent. However, in contrast Aberdeen saw persistent decline in investment property prices, largely due to the impact of the fall in the oil price. Values were down an average of 3.7 per cent in the last year. Hometrack expects overall UK city house price growth to rise 5 per cent over the coming year.
The highest annual growth rates are found in cities where house prices remain below their 2007 levels. The current group of high growth cities includes Leicester at 7.5 per cent, followed by Birmingham at 7.3 per cent. Manchester and Nottingham each also saw high growth at 6.6 per cent and 6.4 per cent respectively. The aforementioned cities have seen weaker price recovery since 2009 and therefore are far more affordable than southern cities.
London is currently experiencing a re-alignment in house prices and earnings, with London house price inflation projected to end in 2018 around 1 per cent, which means prices falling in real terms.
Research and Insight Director at Hometrack, Richard Donnell, says: ‘Over the last 12 months there has been a dramatic south to north shift in the momentum of house price growth which has culminated in Glasgow registering the fastest rate of house price inflation in the UK. In Glasgow, Edinburgh and many other large regional cities affordability is less of a barrier than in London and the south east, particularly for first time buyers, and with mortgage rates remaining low this is helping to stimulate demand and increase activity in these markets. As we move into 2018 increases in regional city house prices is likely to offset very low nominal growth in London. There is 20-25 per cent of additional upside in house prices in regional cities with a simple adjustment on affordability metrics. Add to this the impact of lower mortgage rates and the clouds of uncertainty around Brexit seeming set to lift in 2018 and we expect regional cities to continue above average house price growth next year and overall city house price growth to hit 5 per cent.’