The latest Hometrack UK Cities House Price Index for September has revealed that UK city house price inflation is running at an annual rate of 2.4%, half the average growth rate over the last five years and below the growth in average earnings (+3.8%).
Annual house price growth across the UK ranges from 4.5% in Leicester and 4.3% in Manchester to -5.5% in Aberdeen. Prices are flat in London and falling -0.5% in Oxford.
Owner occupier demand is holding up
The latest data on mortgages for home purchase shows that demand from buyers looking to purchase their main home is holding up. Brexit uncertainty is one factor weighing on buyers’ minds, but it is market fundamentals, particularly the affordability of housing and the cost of moving, that are of greater importance in dictating the strength of city-level housing markets.
Hometrack has updated its analysis on the discount to asking price that sellers need to accept in order to achieve a sale and the average time to sell (from first marketing date to the property going under offer). House price growth has moderated over the last three years as sales volumes decline as a result of high price growth and stretched affordability. The average time to sell a property across UK cities has reached a 3-year high of 12 weeks, up from 8 weeks in 2016. Discounts to asking price have grown from 2.2% in 2016 to 3.8% today but there is a wide variation around these averages at a city level.
Market conditions strong across seven English cities
There are seven cities across England and Wales where underlying market conditions remain strong – with potential for further price inflation. Cardiff, Leeds, Nottingham, Birmingham, Leicester, Manchester and Sheffield all have an average time to sell of between 8 and 9 weeks and discounts to asking price of 2-3%. These cities have registered steady, above average house price growth over the last 1-2 years as demand for housing is sustained on the back of rising employment and attractive affordability.