City house prices in the UK underwent small increases during December 2014 as growth hits a comfortable plateau, a new report has claimed
Property value in cities rose by 0.4 per cent last month to give an annual rate of 8.3 per cent. This means the pace of growth has begun to plateau and is expected to slow even further during 2015.
The figures come from the latest national index report produced by Hometrack.
A closing gap
Whilst house price recovery continues to spread throughout the UK, there has been a narrowing of the gap between the best and worst performing cities with the disparity is now at its lowest level for 15 years.
Cities appear to be falling into one of two distinct groups: those accelerating off a low base after years of static or decreasing prices and those that have experienced strong house price recovery in the past two years and which are now starting to slow as a result of cooling demand and affordability constraints.
During the second half of 2014, a total of 11 cities recorded house price inflation growth with Scottish cities leading the way. Edinburgh, Aberdeen and Glasgow all topped the leaderboard with demand that has been on the rise since the independence referendum in September 2014.
In England, Newcastle, Leicester and Liverpool saw prices continue to rise from a low base over the same time period. Their respective house prices are now nine per cent, two per cent and 15 per cent below levels seen in 2007.
Amongst the cities reporting a slowdown, Oxford, London, Cambridge and Bristol all recorded a slowing rate of growth off a high double digit bas while Bournemouth and Leeds also noted a slacking in pace.
Richard Donnell, Director of Research for Hometrack, said city house prices are set to converge further in the initial months of 2015 as high growth markets slow down and lower growth markets plateau.
“Low mortgage rates are making housing look affordable but it is the willingness and ability of households to borrow, against the background of greater mortgage regulation, which will most influence the housing market in 2015,” he said.