City level house price growth running at 7.7%, in line with our forecast made a year ago.
Transaction volume growth over 2016 projected to range from +8% to -10% reflecting differing underlying market conditions across cities.
We expect city level house price growth to average 4% over 2017. Above average growth in large regional cities is projected to offset low nominal price growth in London.
City level house price growth is running at 7.7%, in line with our projections this time last year. We expect city house price growth to slow to 4% in 2017 with weaker growth in London and other southern cities offset by sustained growth in large regional cities.
City house price growth running at 7.7%
UK city house price inflation is running at 7.7%, up slightly on 12 months ago (7.3%), and in line with our projection for 7% capital value growth over 2016.
Three distinct city level trends
Comparing the current rate of house price growth to that registered 12 months ago reveals three distinct trends for price appreciation.
Accelerating cities – London, Oxford, Cambridge, Bournemouth and Bristol – typically these are the ‘high growth’ cities of the last 5 years which are now slowing on stretched affordability levels and falling sales volumes. The slowdown in Bristol is less marked over 12 months but since mid-2016 growth has declined more sharply from over 14% per annum. Belfast is included in this group where growth is slowing off a lower base.
Strong, steady growth – this group includes Birmingham, Manchester, Leeds, Leicester, Nottingham and Portsmouth. These cities have been registering robust, consistent house price growth of 5-8% per annum over the last 12 months on stronger underlying market conditions. Fig. 1 highlights the 11 cities where house price growth is higher today than this time last year.
Falling – just one city, Aberdeen, continues to register year on year price falls (-6.4% per annum) with the 50% decline in the oil price since mid-2014 continues to impact the local economy and demand for housing.
Cambridge records fastest slowdown in 2016
Cambridge has recorded the most pronounced slowdown in the rate of growth over the last 12 months down from over 12.5% to 2.5% today.