Average property prices at the largest UK cities increased in value by 1.7% on average in the year to June 2019, according to the latest City House Price Index by Hometrack.
However, there is a growing polarisation in market conditions across southern England and the rest of the country and, whilst prices in London are still falling annually, quarterly growth has improved, according to the Index.
Richard Donnell, director of research and insight at Hometrack, said: “Seven cities are registering house price growth of less than 1% per annum – the first time we have seen this since June 2013. All these cities are in the south of England except for Aberdeen where price growth is -3.2%. Edinburgh (5.1%) is registering the highest growth, followed by Liverpool (4.9%) and Cardiff (4.7%).”
Bristol has the highest annual growth rate in southern England at 2.0%. The remaining six cities are all registering growth of between -0.3% and +0.8% as affordability constraints impact demand, resulting in a lower rate of house price inflation. Weaker demand means sales are not keeping pace with the new supply of homes for sale. Increases in supply are compounding the downward pressure on prices in southern cities. The opposite is true elsewhere.
Sales fail to keep pace with new supply in south
New supply has grown faster than sales in cities across southern England since 2016 - the start of the slowdown in price growth. Today there are 1.3 units of supply new to the market for every sale agreed. Before 2016 supply struggled to keep pace with sales with a ratio closer to 1 which created scarcity and a strong upward pressure on prices.
Underlying market conditions have weakened in cities along the south coast of England as well, where the ratio of sales to new supply is approaching the current ratio in London.