London’s house price growth falls by two-thirds in just three months
22 December 2014
In its latest UK Cities House Price Index, Hometrack has revealed that UK house prices have risen by 8.9% year-on-year but there has been a continued slowdown in the monthly rate of growth in recent months.
In the last quarter, the rate of house price growth in London slowed by two-thirds compared to the 12 month average (0.5% compared to 1.4%), with Edinburgh, Glasgow, Southampton, Bristol and Birmingham now all reporting higher inflation than the capital in the last 3 months as demand for housing continues to push prices ahead. This growth is being sustained by the fact that house prices are still rising off a low base in many places.
In eight cities house prices are currently above their 2007 peak, a year before the global financial crisis took hold. London (30.5%), Cambridge (28.7%) and Oxford (21.9%) lead the pack, although these markets have started to register the clearest slowdown. In London, this means that there has been an average annual rise in property values of £57,000, which is almost four times the national average of £15,200 and nearly twice the UK’s average income. Liverpool, meanwhile, witnessed the lowest increase in values with just £3,000 added to house prices in the last 12 months.
In Scotland, demand fed back into the market post-referendum, with Edinburgh (1.8%) and Glasgow (0.9%) registering the fastest house price inflation in the last quarter. On the flip side, the former high growth cities of Cambridge and Aberdeen have seen the fastest slowdown with growth of -0.2% and -0.4% respectively.
“The high growth cities over the last year are now recording the fastest slowdown and this is most pronounced in smaller cities such as Cambridge and Aberdeen,” Richard Donnell, Research Director of Hometrack, said. “Overall we expect modest UK house price growth of 2% in 2015, which is more in line with earnings growth. Significant pent-up demand has feed back into the market in the last two years pushing house prices higher in all cities but the underlying rate of growth is now slowing across the majority of markets.”
He added: “Whilst there are only isolated price falls city level, there is clear evidence of more localised price falls starting to emerge with, for example 20% of London postcodes registering price falls in the last quarter. We would expect to see further, modest price falls the months ahead as prices re-align off a high base to what buyers are prepared to pay.”