House price growth in some of the UK’s key cities is continuing to increase, in all but one region, according to the latest report from Hometrack.
In addition, the firm suggests that property prices in these locations will rise by 4% during 2017.
Slowing Growth
Despite the growth in property prices, these increases are at a slower rate than in previous months. Cambridge for example has seen its rate of growth slip from 12.5% to 2.5% over the last year. London has seen growth fall from 7.6% to 3%-the lowest level of growth seen in the capital for over 3 years.
These two cities, alongside Oxford, Bournemouth and Bristol have seen the largest rate of growth of UK cities in the last five years, but are now experiencing a slowdown.
More steady growth has been recorded in Birmingham, Manchester, Leeds, Leicester and Nottingham. These particular cities have seen house price growth between 5% and 8% per annum during the last year.
Aberdeen is the only city to see year-on-year falls, with values 6.4% down.
Property price growth in key UK cities is slowing
Increases
For all sales, cities covered by the index saw between a 50%-60% rise in sales volumes in the last five years. In cities where property price growth has been high and affordability levels most stretched, volumes of sales have dropped off during the last two years.
Looking to 2017, Hometrack suggests that weaker growth in real household incomes and worries over Brexit will impact on housing market sentiment.
The Hometrack report states: ‘While the economy is projected to grow in 2017, levels of employment are forecast to grow more slowly although mortgage rates are expected to remain low by historic standards. Given the current projections for the economy, we do not believe that any of the cities covered by the index will be registering year on year price falls at the end of 2017.’[1]
‘However, we do expect the rate of city level house price growth to slow over the next 12 months led by weaker growth in cities across southern England. This is where affordability pressures on home owners are most extended and where previously buoyant investor demand has been impacted by fiscal changes and by tougher underwriting standards for mortgaged borrowers,’ it continues.[1]
Moderation
Moving on, the report says: ‘While we expect some moderation in the rate of house price growth from current levels in larger UK regional cities, such as Birmingham and Manchester, we believe the underlying fundamentals in these markets remain attractive and there is potential for further price appreciation over 2017.’[1]
‘We expect our London index to register nominal growth of 2% in 2017. This will equate to a fall in real terms. A harder landing for house prices could drag the headline rate lower. While house prices are registering small, single digit price falls in central London areas, a lack of forced sellers is expected to minimise the scale of price falls,’ the statement concludes.[1]
[1] http://www.propertywire.com/news/europe/property-price-growth-slowing-key-uk-cities/