Residential property prices across many of the UK’s largest 20 cities appear to offer plenty of room for growth in 2017, despite having already increased significantly over the past 12 months, the latest Hometrack UK cities house price index shows.
The average price of a home in these cities rose by 7.7% year-on-year in November, according to Hometrack, which forecasts city house price growth of 4% in 2017.
All the cities showed property price growth in the 12 months to November except Aberdeen, where there was a 6.5% fall year-on-year.
The biggest housing market slowdown over the past 12 months was recorded in Cambridge, where price growth is down from over 12.5% in November 2015 to 2.5% today.
Other cities where house prices are now decelerating after five years of high growth include London, Oxford, Bournemouth and Bristol, reflecting a general fall in property sales in these areas.
“In London and southern cities homeowners are facing the greatest affordability pressures, while the buoyant investor market has been impacted by fiscal changes, as well as tougher underwriting standards for mortgage borrowers,” said Richard Donnell, insight director at Hometrack.
In contrast, cities registering sustained growth in house prices are the ones expected to record higher turnover over 2016, with the greatest uplift likely in Birmingham, Leeds, Leicester and Nottingham.
Donnell added: “In larger regional UK cities, such as Birmingham and Manchester, affordability remains attractive and we believe there is room for further price growth over 2017. With this in mind, we predict that city level house price growth in 2017 will run slightly higher than the current consensus of 2-3%, however this will largely be driven by the scale of the slowdown in London.”
Richard Sexton, director of e.surv, said that the latest figures from Hometrack show that property prices in the UK’s largest cities are refusing to slump, with demand for property across the country remaining strong.
He said: “In the long term, this is going to cause further pressure on the housing market due to a systemic under-supply of affordable properties. The steady annual rise of house price growth in cities such as Manchester and Liverpool is testament to this.
“Until the gross imbalance between supply and demand is rectified by the Government and the industry working together to implement a substantial house-building programme, rocketing prices will continue to be the main barrier to those wishing to buy a home.”