Transaction surge suggests price rises - Hometrack

There has been a boost in transactions of between 15 and 35 per cent in cities outside the south east of England, suggesting the most significant recovery in house market activity since 2007 according to Hometrack.

The property consultancy says Belfast, Leeds, Liverpool and Cardiff all registered a 20 per cent to 39 per cent growth in sales volumes in 2014 compared to the average for the previous five years. Rising demand and increased market activity have resulted in increased house price inflation, which is running at between 5.0 per cent and 8.0 per cent in those cities, says Hometrack.

In contrast, the growth in housing transactions in 2014 in high value cities' in the south east of England was well below average.

Sales volumes fell in all the high growth cities over 2014 compared to 2013, specifically down 13 per cent in Cambridge, down seven per cent in Aberdeen, down two per cent in Oxford and down one per cent in London.

Lower sales volumes are feeding into a slower rate of house price growth in these cities, claims the consultancy.

Transactions are a lead indicator for house prices explains Richard Donnell, director of research at Hometrack.

The acceleration in house price growth in London in the last two years was preceded by three years of rising transactions. A similar pattern is being registered in the cities outside the south of England, as pent-up demand returns to the market supported by low mortgage rates and an improving economic outlook he says.

But he warns that while the pick-up in activity is welcome news, housing sales in 2014 are still 38 per cent lower than the level seen in 2007 and 10 per cent below the average for the last decade.

The ongoing housing recovery is far from broad based and remains focused on higher value areas within cities where households have equity and find it easier to access mortgage finance he suggests.