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The latest Hometrack UK Cities House Price Index has revealed that overall property price inflation in cities is running at 5.5 per cent for the 12 months until March 2018. This is up from 3.7 per cent the previous year.
The newfound growth is driven by cities such as Edinburgh and Nottingham. The two cities saw growth of 8.1 per cent and 8 per cent respectively. Manchester and Birmingham also performed well, with growth of 7.4 per cent and 7 per cent respectively. The growth found in northern cities is likely sustained by affordability and a lack of housing for sale.
In contrast, the fellow northern city Aberdeen is dragging behind, with a price decline of -6.6 per cent. Cambridge saw a drop of -1.2 per cent, whilst London saw minor growth of 1.6 per cent.
The weak growth in London is likely due to the fact that the level of sales is not in line with the new supply entering the market. There are currently 1.5 homes entering the market for every individual home sold. Demand is weaker and sellers are reluctant to accept lower prices leading to a longer sales period. London has the longest sales period of all UK cities at 17 weeks. However, prices have registered a minor increase of 0.9 per cent over the last few months, suggesting house price decline is moderating.
Other cities such as Oxford and Cambridge are also experiencing supply growing faster than sales. In contrast, cities like Edinburgh, Manchester, Nottingham and Birmingham have all seen house price growth that is above average and supply levels broadly in line with sales.
Insight director at Hometrack, Richard Donnell said: ‘The headline rate of city house price growth continues to be driven by above average increases in regional cities where attractive affordability and a lack of housing for sale is supporting house price inflation. This latest report identifies other cities such as Cardiff, Leeds, Newcastle and Sheffield as having recorded a sustained uplift in the rate of growth over the last 12 months. Whilst demand for housing in London has cooled over the last 18 months and the rate of house price growth has slowed there are some signs that underlying market conditions are improving. ‘
He continued: ‘Last month we reported that residential values in London were falling across more than two fifths of postcodes and this has narrowed to 36 per cent over March. Falling asking prices over the last 2 years, especially in central areas of London, together with deeper discounts from asking to achieved prices and greater realism on the part of sellers is likely to support sales rates and reduce the downward pressure on prices. 2018 could be the year when housing turnover in London starts to plateau having fallen by almost a fifth since 2014.’