There has been a significant acceleration in house prices in Britain’s big cities with lower-priced locations such as Portsmouth, Nottingham and Birmingham leading the way according to data consultancy Hometrack.
Across a sample of 20 major cities, overall house price inflation increased to 11.0 per cent over the past year - that’s the highest annual rate of growth for almost 18 months.
Portsmouth, Nottingham and Birmingham recorded the highest rate of annual house price growth for over 10 years while Leeds and Glasgow have seen the highest rate for over eight years. All these cities have experienced sustained house price inflation since 2013 largely due to the improving economic conditions, rising earnings and employment levels with affordability boosted by low mortgage rates, says Hometrack.
London, Bristol, Oxford and Cambridge all continue to record double digit rates of house price inflation. However, there are early signs that the rate of growth in these locations is starting to slow. All these cities recorded a small drop in the headline rate of growth over February as affordability and sentiment factors start to impact pricing levels.
“There has been a notable and unseasonal acceleration in city level house price growth in the last three months. Sixteen of the 20 cities covered by our index are registering an annual rate of house price growth that is higher than 12 months ago” explains Richard Donnell, Insight Director at Hometrack.
However, four cities have seen the rate of growth slow, with Aberdeen and Belfast hardest hit. Belfast in particular has lost momentum where a modest recovery appears to have stalled with house prices still 45 per cent down on their 2007 levels.
“While there is a lot of focus on the impact of investors buying ahead of the April stamp duty deadline the vast majority of demand for housing comes from existing homeowners who account for 80 per cent of sales. The pick-up in growth across the UK cities has more to do with a lack of supply and increased demand on the back of the improving economic outlook and low mortgage rates” says Donnell.