The survey finds an overall slowdown in growth which means that although supply still lags some way behind demand, the cost of property for relocating families has plateaued.
Key Findings
- Seven cities recorded a slowdown in the rate of growth in the second half of 2014
- Eleven cities recorded an acceleration in growth over the second half of 2014, typically lower growth markets rising off a low base
- Year on year growth ranged from +14.7% in London to +4.7% in Liverpool in 2014
- The cities with the fastest house price growth over the quarter to December were Edinburgh (1.4%); Glasgow (0.7%); Liverpool (0.7%); and Southampton (0.6%)
- 12 cities still have house prices below their peak levels of 2007
UK house prices increased by 0.4 per cent in December to 8.3 per cent year-on-year (4.5% in 2013) but the rate of growth has plateaued and is set to slow in 2015, residential analyst Hometrack has revealed in its latest UK Cities House Price Index.
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 (Feb 1999). There are now two distinct groups of cities – those 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 an acceleration in house price inflation over the second half of 2014, led by Edinburgh, Aberdeen and Glasgow where demand for housing has been boosted post the referendum result. Newcastle, Leicester and Liverpool have also seen the rate of growth continue to rise off a low base in 2014 H2 with house prices in these cities 9 per cent, 2 per cent and 15 per cent below their 2007 levels.
Oxford, London, Cambridge and Bristol have all registered a slowdown in the rate of growth over 2014 H2 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 price growth is more than a solely London phenomenon.
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 per cent from their 2009 lows in recent years.
Richard Donnell, Director of Research at residential analysts Hometrack, said, “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 2 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. 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.”
In the Winter 2014/15 issue of Re:locate magazine, our property coverage considers what 2015 may hold in store for relocating employees looking to buy a home in the UK, and brings you the latest on the serviced apartments scene.