Northern UK cities catching up in house price growth terms

Taylor Scott International News

UK house prices in key cities rose by 7.9% in the 12 months to January 2015, however prices were up just 1.1% in the last quarter of the year as the slowdown continued. The data from the latest Hometrack cities house price index shows that year on year house price growth ranged from 4.1% in Glasgow, where house prices average four times average earnings, to 8.6% in Oxford and London where house prices average 12 times average earnings. The high growth cities of 2014 continued to see the rate of growth slow with London down to 13.6%, Bristol at 10.8%, Oxford at 8.6% and Cambridge at 5.3% while six out of the 20 cities hit their post downturn lows just two years ago, but are now up by an average of 9% and will drive future growth. It means that house prices have risen by as much as £144,000 in cities that bottomed out in 2009 but as affordability has affected growth elsewhere Overall the impetus behind continuing UK house price growth is shifting towards cities like Liverpool, Sheffield and Glasgow, which bottomed out only two years ago, away from the cities that started to recover in 2009 but have since slowed due to pressures on affordability. Over the last six years, London and Oxford have experienced house price growth of 55.2% and 42.1% respectively since the trough. However affordability pressures will limit growth in the medium term with both cities registering over 12 times the price to earnings ratios, almost twice the UK average of 6.3 times. By contrast in cities that only started their recovery two years ago such as Edinburgh (10.7%), Leeds (10.1%), Newcastle (8%) and Glasgow (6.3%), house prices are averaging between three and six times the average earnings. There are 14 UK cities in total that have been recording house price growth since 2009, but the length of the recovery does not provide a guide to the level of house price growth. While London has seen the average house value increase by 55% or £144,000, the rebound in house prices in Manchester and Birmingham have been just over 10% or £12,500 over the same period. The six cities that have been recovering for the last two to three years have recorded an average increase of just 9% or £11,000 led by Belfast and Edinburgh. The weakest growth has been seen in Glasgow with average prices up 6.3% or £6,300 since July 2012. ‘A focus on average UK house price movements masks critical trends at a city and sub-regional level. This is important for both businesses operating in the housing market and policy makers trying to address the challenges of growing housing supply,’ said Richard Donnell, director of research at Hometrack. ‘House price growth within cities reflects the strength of their local economies and the demand for housing. While Manchester and Birmingham saw prices bottom out in 2009, growth has been more subdued than in other cities… Taylor Scott International

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