We all know how rapidly house prices have risen in recent years, but it's important to remember that the national figures are just the average. However, this means that some areas experience far greater levels of house price growth than others, and perhaps understandably, the bulk of that growth tends to occur in major UK cities – and a new report from Hometrack confirms this trend.
The figures, from the latest Hometrack UK Cities House Price Index, reveals that house prices in the 20 biggest UK cities rose by an average of 11.2% year-on-year in May, putting the price of a typical property in these cities at £237,500. This also marks a boost in city level price inflation – up from the average rise of 10.8% recorded in April – and it isn't just London that's experiencing such impressive increases.
In fact, Bristol has become the first city outside the South East to see house price inflation outpace London in more than six years (since January 2010), with average prices in the city rising by 14.1% year-on-year. This beats London's annual growth rate of 13.8%, which in itself marks a slowdown from 14.2% in April.
Of course, house prices in the capital are still the highest overall – the average London price clocks in at a whopping £472,100 – but the slowdown in price growth is notable. Indeed, London was one of eight cities to register slower annual growth, and Hometrack expects a further deceleration in house price rises for the remainder of the year as buyers adopt a "wait and see" approach following the referendum result.
It's also interesting to note that, while some cities saw significant house price growth – particularly regional ones – others experienced a more modest uptick, and Aberdeen even saw a dramatic drop in prices of 9.6% over the year.
"House price inflation in major cities outside of London and the South East, such as Bristol and Liverpool, has been accelerating, but it is now expected to slow towards low single digits in the coming months as demand cools on the back of the EU referendum result," said Richard Donnell, insight director at Hometrack.
"However, at present we expect housing market turnover to bear the brunt of increased uncertainty rather than house prices… the fundamentals of the housing market remain unchanged, with record low mortgage rates and a wide imbalance between supply and demand, [but] the more important question is how many buyers and sellers feel confident to participate in the market in the near term.
"The sooner a clear picture emerges over the likely impact on the economy and the outlook for jobs and mortgage rates, the sooner transaction volumes should stabilise and more buyers return to the market."
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