City level house price inflation at 8.4%
10-24-2015
By Ruth Gillbert
City level house price inflation is running at 8.4 per cent a year up from 6.6 per cent as a post-election surge in demand continues to put upward pressure on house prices, according to the September 2015 Hometrack UK Cities House Price index.
Hometrack said there are signs the underlying pace of growth may have peaked.
The organisation added the year-on-year rate of house price growth masks more volatility in the underlying rate of growth.
Additionally, there is a clear cyclical movement in house prices and since March 2015 and the three month rate of growth, expressed on an annualised basis, has risen to over 16 per cent, slipping back slightly in September to 15 per cent.
Hometrack said that this will be in part due to seasonal factors with mortgage approvals for home purchase increasing strongly over June and July while falling back 15 per cent in August.
Alongside this, the outlook for housing demand remains positive but the question is whether the post-election surge can be sustained.
Hometrack said it expects demand to moderate in the run up to the year end with a modest slowdown in the pace of monthly house price growth compared to the last four months.
Hometrack also said while city level house price growth is running ahead of earnings, average house prices are still below the levels recorded eight years ago in nine cities.
Belfast prices still remain almost half the level seen in 2007 while those in London are 43 per cent greateer highlighting there is no such thing as a single UK housing market.
Jeremy Duncombe, director at Legal and General Mortgage Club, said: “Both the value of homes and the speed of house price inflation varies significantly across the UK.
“Today’s figures highlight that properties in Bristol have increased in price by 1.2 per cent month on month, compared to a fall of 0.4 per cent in the Sheffield region.
“This is not only bad for the health of the market, but it also creates potential barriers for aspiring homeowners. With house prices rising faster than wages, many buyers are finding that the cost of homeownership is increasing faster than they can save for a deposit.
“High prices can also mean that people are forced to move out of the area they want to live in, to somewhere more affordable.
“To ease this problem more homes need to be built, both in the capital and in other parts of the country so that more people can live in their first choice location. Across the country we need around 250,000 extra houses per year to be built in order to boost supply and make house prices more affordable.”