Tipping point for house prices
Cambridge is second only to London in double digit price to earnings ratios when it comes to buying a home.
The latest Hometrack UK Cities House Price Index shows that since the downturn in 2009, prices in the city have lifted 84% - only 2% lower than London, and 12% more than Oxford.
Nationwide, city level house price inflation is running at 8.4% as the upward momentum in house prices continues.
Yet the impetus for house price growth is shifting from the south to cities in the midlands and the north, Hometrack reports, simply because this is where people can afford to buy.
In Cambridge the price to earnings ratio is nearly 14x, only just behind London, and compared to a UK average of 6.5x.
“As affordability levels become stretched, fewer households can participate in the market which will lead to reduced levels of turnover and a resulting slowdown in the rate of house price growth,” Hometrack says.
“In London the year on year rate of house price growth has slowed close to its lowest level for three years (9%). We expect growth to slow to low single digits in the next six to 12 months as demand softens in the wake of a raft of fiscal policy changes aimed at overseas buyers and investors as well as concerns over the impact of Brexit on the economy. The top 5% of the London market by value is already registering 0% house price growth.”
The current average price of a house in Cambridge is £420,600, in London it is £482,800, and in Oxford £415,000.