House prices in key cities in the UK have increased by 8.5% in the year to September 2016 and 1.7% in the third quarter of the year, the latest index shows.
This take the average price in the Hometrack cities house price index to £239,100 with 11 cities seeing higher growth than at the start of the year and nine slowing. The data also shows that growth in London has slowed rapidly to its lowest level of quarterly growth for 20 months.
Residential values across UK Cities are registering a higher rate of growth than the overall UK market where house price growth is running at 7.2% per annum and the report also says that house price inflation continues to run more than three times faster than the growth in earnings as household confidence improves, earnings rise ahead of inflation and low mortgage rates make housing affordable for those with equity.
Year on year all cities have seen growth apart from Aberdeen where prices are down 9.5%. Annual growth is led by Bristol with prices up by 12.3%, then London up 10%, Southampton up 8.6% and Cambridge and Birmingham both up 8%.
But on a quarterly basis Aberdeen saw prices fall by 3% and Oxford by 2.5% while a number of cities saw only marginal growth including Leeds, Portsmouth, Newcastle and Belfast where prices increased by just 0.1%, 0.4% and 0.6% respectively.
Third quarter growth was led by Cambridge at 3%, Liverpool at 2.6% and Cardiff at 2.5% while Bournemouth saw growth of 1.8% and Southampton and Birmingham both at 1.7%.
However, the report points out that some cities, while still seeing quarterly growth, have still seen price growth slow considerably such as London which has recorded its lowest growth rate since January 2015. In the last quarter London residential values increased by 0.9% compared to an average of 3% over the last three years. The slowdown, however, is yet to impact the annual rate of growth which is running at 10% but is expected to move towards 5% by the year end.
The Hometrack report also points out that these patterns of relative house price growth are re-enforced by an analysis of property listings and sales data over the last three years which shows that sales rates are close to matching the flow of new property to the market, creating scarcity and supporting house price growth.
In contrast, London has the weakest market conditions with the new supply of homes coming to the market growing faster than sales which have fallen back in recent months on weaker demand. The ratio of sales to new supply is at its highest level for three years, re-enforcing the outlook for a continued slowdown in the rate of house price growth across London in the months ahead.
