Property prices in key UK cities up by 0.4% in December
House prices in key UK cities increased by 0.4% in December to an annual rate of 8.3% but the rate of growth plateaued and is set to slow further in 2015, according to the latest national index report.
While the recovery in UK house prices is spreading, the gap between the best and worst performing cities has narrowed to its lowest level for 15 years, the index from Hometrack shows.
There are now two distinct groups, cities that are accelerating off a low base after years of either static or falling prices and those that have enjoyed strong house price recovery over the last two years and where house prices are starting to slow on cooling demand and affordability constraints.
Overall 11 cities registered growth in house price inflation over the second half of 2014, led by Edinburgh, Aberdeen and Glasgow where demand for housing has increased after the September independence vote.
Newcastle, Leicester and Liverpool have also saw growth continue to rise off a low base in the second half of 2014 with house prices in these cities 9%, 2% and 15% below their 2007 levels.
Oxford, London, Cambridge and Bristol have all registered a slowdown in the rate of growth over the second half of 2014 off a high, double digit base. Other cities registering a slowdown in the rate of growth include Bournemouth, Belfast and Leeds showing that slower house
Slower growth in housing demand, tougher mortgage checks and affordability factors are behind the slowdown in these cities where house prices have bounced by as much as 55% from their 2009 lows in recent years, the report says.
According to Richard Donnell, Hometrack director of research, house price growth at a city level looks set to converge further in the first half of 2015 as high growth markets continue to slow and lower growth markets start to see growth plateau.
‘Pent-up demand has fed back into the market in the last two years, supported by record low mortgage rates, but mortgage approvals have weakened in the last five months with a knock on impact on house price growth,’ he said.
‘Low mortgage rates are making housing look affordable but it is the willingness and ability of households to borrow, against the background of greater mortgage regulation, which will most influence the housing market in 2015,’ he added.