House price growth in UK's 20 major cities 'may have peaked' - but Cambridge property soars 12% in a year
- House price inflation in major cities hits 8.4% annually
- But expert believes city house price growth is likely to slow
- Cambridge, London and Oxford have seen double digit percentage growth
By Eleanor Ross For www.Thisismoney.co.uk
The underlying rate of house price growth in Britain's biggest cities may have peaked as they recorded a slower rate of post-election gains, a report has found.
Although city house price inflation is running at 8.4 per cent per yearly, up from 6.6 per cent in May, 13 of the 20 cities registered a slower rate of growth in July to September compared to the previous three months.
The index, run by Hometrack, found that despite the annual rise, the rate of property price growth masks the 'uncertainty' in the UK housing market.
Floating ahead: House prices in Cambridge are up 12.1% in the last year, according to the index
It is thought the three-month rate of growth has plateaued which, although in part due to seasonal factors, is also a result of an increase in mortgage approvals over June and July before plummeting 20 per cent in August.
The three-month growth rate in property values for the 20 cities is 3.7 per cent.
Richard Donnell, director of research, Hometrack, said: 'It is important not to read too much into one month's headline results but there are signs that the pace of city level house price growth is likely to continue slowing.
'There has been a surge of demand since the election in May but weaker mortgage approvals and evidence from survey data suggests less frenetic demand in the final quarter of the year.'
The pricing discrepancy between London and other major regional cities is at its widest level for 20 years.
According to Hometrack: 'This highlights a seemingly overvalued London market, on a price/earnings basis, and the prospect of further price growth to come in the large regional UK cities.'
City living: According to the Hometrack index, Cambridge, Oxford and London have recorded double-digit percentage growth in the last 12 months
Despite the widening gap between London and the rest of the UK's housing market, Foxtons recently reported a slowdown in the capital's luxury housing market which they blamed on higher stamp duty costs.
Recently, shares have fallen in the upmarket estate agent chain as property commissions fell by 3.7 per cent to £52.1million in the nine months to the end of September.
This was blamed on house prices in the capital becoming more unaffordable for an increasing number of people.
Analysts at Numis, a leading corporate advisor, said: 'Foxtons' update points to a continuation of challenging trading conditions in the London residential market, but the group has made good progress in the third quarter against weaker comparatives.'
Numis cut its annual earnings forecast for the estate agent this year by two per cent to £47million which suggests a sluggish situation.
Lagging behind: House prices in Belfast are below their 2007 peak. Cambridge meanwhile has soared ahead
Nationwide, house prices in some cities still haven't reached the levels recorded eight years ago. In Belfast, prices are still 46 per cent lower than in 2007.
Close behind is Liverpool, where house prices are nearly 14 per cent lower over the same period.
City level house price growth is running ahead of earnings, but average house prices remain below the levels recorded in 2007 in nine cities.
It seems housing demand is going to continue positively against the backdrop of lower mortgage rates and rising consumer confidence.
Full picture: Average house prices in major cities across the UK. Most have seen prices rise in the last year
In London, the property market is still booming, with the average price of a house now £437,700, more than 12 times average earnings.
In just one year, the average price of a home in the capital rocketed by 10 per cent, according to Hometrack, a technology and analytics company.
Demand heavily outsrips demand according to the Greater London Authority who reports that there aren't enough homes to accommodate everybody in the capital, which is expected to reach 11million by 2050.
As a result, the rental market has increased, with an average of £816 reached per month across England and Wales, where they dropped by 5.4 per cent to £536.
Londoners were again hit by crippling rents as they increased by 11.6 per cent over the past year - the price for the average rented accommodation in London is now £1,301 per month.
However, questions have been raised over whether the rate of growth since May 2015 can be sustained.
Hometrack predicts that Demand is expected to moderate in the last three months of 2015, and by the year's end, we can expect a moderate slowdown.
It added: 'Putting the relative performance of UK cities into wider perspective shows a wide variation in performance from city to city emphasising that there is no single UK housing market – house prices in Belfast prices still remain almost half the level seen in 2007 while those in London are 43 per cent higher.
'The variation in growth reflects the strength of underlying demand for housing and the health of the local economy with the index throwing light on these localised trends at a granular level.'