Revealed: The cities that are beating London in the house price inflation stakes
12-21-2014
- Property prices in Edinburgh, Glasgow, Southampton, Bristol and Birmingham have increased at a faster pace than London in the last quarter
- London house prices grew 0.5%, while Edinburgh's jumped 1.8%
- Cambridge and Aberdeen have seen house price declines of 0.2% and 0.4%
By Camilla Canocchi for Thisismoney.co.uk
House prices in five cities around Britain have grown at a faster rate than the capital's cooling property market in recent months, new data shows.
Property prices in Edinburgh, Glasgow, Southampton, Bristol and Birmingham have increased at a faster pace than London in the three months to November, according to the latest Hometrack UK Cities House Price Index.
If house prices in London grew by 0.5 per cent in the quarter – the same rate of growth as Manchester, Portsmouth and Belfast - Edinburgh overtook the capital with the biggest rise at 1.8 per cent during the same period.
Edinburgh overtook London with the biggest rise in house prices at 1.8 per cent during the last quarter
Glasgow and Southampton also saw house prices rising faster than London, with a 0.9 per cent rise, while Bristol and Birmingham both recorded a 0.6 per cent uplift, Hometrack said.
Properties in London are still the most expensive in the UK at an average of £403,200, with prices 30.5 per cent higher than their 2007 peak, followed by Cambridge and Oxford, with house price inflation at 29 and 22 per cent respectively compared to their pre-crisis levels.
The average property in the capital has also become £57,000 more expensive over the past year - the biggest increase in the UK and which the report said is almost twice the UK's average income.
But London and these other cities are also showing some of the fastest rates of decline in house price growth in the last three months - despite overall average UK prices still soared by 8.9 per cent in the past year to £185,900, Hometrack said.
Up and down: Glasgow (left) registered one the fastest house price inflation in the last quarter
Cambridge (right) has seen the steepest slowdown
Up and down: Glasgow (left) registered one the fastest house price inflation in the last quarter, while Cambridge (right) has seen the steepest slowdown
Former high growth cities of Cambridge and Aberdeen have seen the fastest slowdown with actual price declines of 0.2 per cent and 0.4 per cent respectively.
Richard Donnell, research director at Hometrack, said the slowdown in the capital will act as a drag on the rate of house price growth across the UK over the next year.
He said: ‘The rate of growth in house prices is starting to lose momentum across other cities in southern England while across the rest of the country modest levels of house price appreciation continue as prices rise off a low base.’
The Scottish cities of Edinburgh and Glasgow registered the fastest house price inflation in the last quarter, as demand fed back into the market post-referendum, Hometrack said.
The average property in Edinburgh is now valued at £196,900, while homes in Glasgow are now worth £110,300 typically. Southampton average house price was £192,300 in November.
House price inflation: Only four cities out of 20 have recorded faster price growth in the last three months
Separate surveys echo Hometrack figures. A survey by property website Zoopla showed yesterday that one in three homes for sale have had their asking prices slashed at least once.
The largest discounts currently on offer can be found in Mitcham, in south west London, where sellers have had to drop prices by an average of 9.2 per cent, which equates to roughly £55,606.
At the other end of the spectrum, Edinburgh sellers are the most confident of achieving their initial asking prices, with only 22 per cent of homes for sale having their prices reduced, Zoopla said.
Official figures, which take in actual sale prices for all properties not just those bought with a mortgage, show October recorded the smallest annual movement since April.
Still the most expensive: The typical home in London has become £57,000 more expensive over the past year
Homes across the UK rose by £2,000 a month as the average house price jumped 10.4 per cent in the year to October to £271,00, according to the latest ONS figures.
On the face of the slowdown recorded across the UK, Hometrack said it expected ‘modest’ house prices growth of 2 per cent next year.
Donnell said: ‘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 said that the introduction of mortgage market affordability tests in the middle of 2014 had reduced the overall impact of low mortgage rates on house prices.
And added: ‘A return to more modest rates of growth should be welcomed especially by the Bank of England. The ongoing heath of the housing market is now about the extent to which the growth in the economy feeds into continued growth in incomes and employment. ‘
Annual figures: Property prices soared at the fastest pace in London than in the rest of the UK
Hometrack also said that 20 per cent of London postcodes had registered price falls in the last quarter.
Donnell said: ‘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. Changes in demand can feed quickly into prices as we have seen in the last 18 months but it is important to remember the equation works in both directions.’
Homes in Bristol are now worth £218,600 typically, having become £26,600 more expensive over the last year, while those in Birmingham have an average value of £134,300, marking a year-on-year increase of £8,200, according to the report.
Liverpool has recorded the smallest increase in property values over the last year, with a rise of just over £3,000, taking the average house price there to £107,000.