Hometrack have recently published the UK Cities Price index data for October, revealing that the UK City House Price inflation has increased to 6% the highest rate of growth since September 2016 and above the UK average growth rate of 4.7%.
The report highlights robust growth in house prices where affordability remains attractive and unemployment levels are low with Manchester (7.9%) and Birmingham (7.3%) registering the fastest growth. The report goes on to predict a potential house price increase of 20 – 25% over the 15 year average in these areas as long as mortgage rates remain low and the economy continues to grow. In contrast house prices in Aberdeen continue to fall at -3.1%.
London prices continue to stabilise, with a price increase of 3%, although this includes the London City index, this increase is mainly being driven by outlying commuter areas. In Central London prices are flat to falling in single digits, the gap between asking and achieved prices is also greater in inner London at 8 – 10%. However the strength of house price growth over recent years means there is significant equity in the London market to absorb the impact of price falls.
Overall house prices are in the process of adjusting to what buyers are willing / or able to pay. Tax changes for investors and low yields have seen a reduction in investor demand in London. Mortgaged first time buyer numbers are also down 15% in the last three years.
The report predicts the recent stamp duty changes will also have limited impact particularly in London where the greatest barrier remains the level of income to pass mortgage affordability tests.
To access more details of the UK Cities Price Index report, please click here