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Hometrack UK Cities House Price Index February 2016 , reports unseasonal acceleration in house price growth across UK cities in last three months




February saw a notable and unseasonal acceleration in house price growth across UK cities according to the latest Hometrack UK Cities House Price Index. 

Overall city level house price inflation increased to 11.0 per cent up from 8.1 per cent a year ago, the highest annual rate of growth for almost 18 months.

Portsmouth, Nottingham and Birmingham recorded the highest rate of annual house price growth for over 10 years while Leeds and Glasgow have seen the highest rate for over eight years.

All these cities have experienced sustained house price inflation since 2013 largely due to the improving economic conditions, rising earnings and employment levels with affordability boosted by low mortgage rates. 


London, Bristol, Oxford and Cambridge all continue to record double digit rates of house price inflation. However, there are early signs that the rate of growth is starting to slow. 

All these cities recorded a small drop in the headline rate of growth over February as affordability and sentiment factors start to impact pricing levels. 

In fact, a closer analysis of the 46 local authorities that cover the London City area shows the average growth rate in the last quarter is approaching half the rate recorded over the last 12 months.

Richard Donnell, Insight Director at Hometrack says

“There has been a notable and unseasonal acceleration in city level house price growth in the last three months. 16 of the 20 cities covered by our index are registering an annual rate of house price growth that is higher than 12 months ago. As the housing recovery spreads some regional cities are recording their highest growth rates for over a decade. 

Four cities have seen the rate of growth slow, with Aberdeen and Belfast hardest hit. Belfast in particular has lost momentum where a modest recovery appears to have stalled with house prices still 45 per cent down on their 2007 levels.

“While there is a lot of focus on the impact of investors buying ahead of the April stamp duty deadline the vast majority of demand for housing comes from existing homeowners who account for 80 per cent of sales. 

The pick-up in growth across the UK cities has more to do with a lack of supply and increased demand on the back of the improving economic outlook and low mortgage rates.

Our latest index results show that there are early signs of a slowdown in the double digit growth cities of London, Oxford, Cambridge and Bristol as affordability pressures constrain demand, buyers become increasingly price sensitive. 

Policy changes affecting investors will bite harder over the course of the year impacting volumes and the level of price appreciation."

  • City level house price inflation increased to 11.0% - the highest rate for 18 months.
  • There are 5 regional cities where the recent pick-up in growth has been strongest – the current rate of growth is the highest for up to 11 years.
  • The four double digit, high growth cities all recorded a small drop in the headline rate of growth.
February saw a notable and unseasonal acceleration in house price growth across UK cities according to the latest Hometrack UK Cities House Price Index. Overall city level house price inflation increased to 11.0% up from 8.1% a year ago, the highest annual rate of growth for almost 18 months.
City house price growth ticks higher again
City level house price inflation increased to 11.0% in February, up from 8.1% a year ago and the highest annual rate of growth for almost 18 months.
Table 1- UK 20 city index summary, February 2016
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Source: Hometrack House Price Indices
Unseasonally strong growth
There has been a notable and unseasonal acceleration in house price growth in the last three months across most large regional cities thanks, in part, to a temporary increase in demand from those looking to beat the stamp duty increase for second homes from April onwards.
Not all down to investor rush
Increased demand from existing home owners in cities where the economic recovery has been less pronounced is an important underlying theme given that the majority of housing sales (80%) continue be driven by home owners.
Fig. 1 - 20 cities index %yoy and %mom
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Source: Hometrack House Price Indices
City Level Summary, February 2016
Source: Hometrack House Price Indices
Growth rate higher in 16 of the 20 cities
16 of the 20 cities covered by the index have registered an increase in the annual rate of house price growth increase in the last year. Some regional cities are recording their highest growth rates for over a decade as the recovery in house prices gains momentum. Four cities have seen the rate of growth slow with the greatest slowdown in Aberdeen and a loss of momentum in Belfast where a modest recovery appears to have stalled with house prices still 45% down on their 2007 levels.
Five regional cities stand out for pick up in growth
Five cities stand out based on a material increase I the rate of house price growth in the last year. These are led by Portsmouth and Leeds where house prices are rising much faster than earnings at between 8% and 9% per annum – see table 2.
Table 2- Top 5 recovery cities
Source: Hometrack House Price Indices

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