City level house price inflation in the UK looks set to reach 10% by the end of 2015, according to a new price index published this month.
The Hometrack UK Cities House Price Index, which analyses UK housing market trends at a city level, reports that house price growth in cities is growing at the faster rate (9.4%) than the wider UK market, which is growing at 7.1%.
According to the index, prices are accelerating in some large regional cities, with Glasgow, Manchester and Liverpool registering the strongest rate of annual house price growth since 2007.
In Glasgow house prices stopped falling three years ago, and have since risen by 13%. The average price of a home in the city is now £110,000. In the last 12 months alone, however, prices grew by 8.3%, the highest rate growth since August 2007.
Meanwhile in Manchester, where prices have been steadily recovering since 2012, average house values have risen by 17% in the last three years to £141,200. The city has seen house values rise by 7% in the last twelve months, the highest rate of growth since July 2007.
In Liverpool house prices were still in decline up to early 2013, but have since risen by 10.5%. During the last 12 months average house prices increased by 5.1%. Despite this growth, the price of an average home in the city is only £109,800, considerably less than in 2007.
These figures contrast starkly with London prices, where annual house price growth has averaged 70% since 2009, and in some places has exceeded 100%. However according to the index, growth has slowed in London, and in some places is falling. In the City of Westminster prices are up by only 1.3%, while in Kensington and Chelsea prices have fallen by 2.6%.
‘Improving consumer confidence and low mortgage rates are boosting demand in cities where the recovery in house prices is in its infancy. While southern cities have been in recovery mode for over six years with price gains of up to 70%, the large regional cities have seen far more modest price rises over just the last three years,’ says Richard Donnell, director of research at Hometrack.
‘Further house price growth is likely to improve market confidence as it pushes down loan to values on mortgaged homes and creates capacity for households to access cheaper credit. Many corporate investors and developers are looking to the major regional cities in search of better value for money in new investments relative to London,’ added Donnell.
‘It is a good sign for the economy, and suggests that the market is recovering well,’ says Dale Anderson, Project Manager from Experience Invest, ‘it will be interesting to see how annual house price growth compares over the next year between the more traditionally stronger cities in the south, with those in the north.’
This article has been provided by Experience Invest, a market leader in UK residential investments.