Taylor Scott International News
The rate of house price inflation in UK cities continues to slow with growth of 10% in the 12 months to February compared to 11.6% six months ago, the latest data shows. But there is considerable regional variation with house price growth ranging from 3.6% in Newcastle to 12.9% in London, according to the Cities House Price Index from residential analysts Hometrack. The highest growth cities in the last quarter were Glasgow and Liverpool, but average values remain 13% and 15% below their 2007 peak. While house price growth in high value cities such as London, Oxford and Cambridge continues to slow, lower value cities registered a sharp uplift in transaction volumes in 2014 as demand for housing grows, which suggests there is substance to the recent pick-up in house price growth. Rising transaction volumes are an important precursor to house price inflation. The 15% to 35% uplift in transactions in 2014 indicates the most significant recovery in house market activity in cities outside of the South East of England since 2007. Belfast, Leeds, Liverpool and Cardiff all registered a 20% to 39% 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% and 8%. In contrast, double digit house price to earnings ratios in the higher value cities in the South East of England are impacting demand. Growth in housing transactions in 2014 compared to their five year average was well below average. Sales volumes were down in all the high growth cities over 2014 compared to 2013, specifically falling 13% in Cambridge, 7% in Aberdeen, 2% in Oxford and 1% in London. Lower sales volumes are feeding into a slower rate of house price growth in these cities, the index report says. It also says that falling sales volumes combined with a general slowdown in activity in the run up to the general election are resulting in lower mortgage approvals for home purchase. Home owners using a mortgage to buy a home accounted for two thirds of sales in 2014 according to analysis by Hometrack. The remaining third of sales were to cash buyers or those borrowing with a buy to let mortgage, groups who are not subject to mortgage affordability tests. ‘Transactions are a lead indicator for house prices. The acceleration in house price growth in London in the last two years was preceded by three years of rising transactions,’ said Richard Donnell, director of research at Hometrack. ‘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 explained. ‘While the pick-up in activity is welcome news, housing sales in 2014 are still 38% lower than the level seen in 2007 and 10%… Taylor Scott International
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