The gap between house prices in London and other major regional cities is at its widest for 20 years, according Hometrack’s UK Cities House Price Index.
Its analysis suggests the slowdown in London price growth is not happening as quickly as expected, with values still growing 4.6% in the three months to August – despite average prices now exceeding earnings by a factor of 12.
Richard Donnell, director of research at Hometrack, said that as a result of the price differential there is potential for growth in the large regional UK cities.
Overall city-level house price inflation was 8.3%, up from 6.6% in May. A 38% uplift in mortgage approvals for home purchases in the last six months shows the scale of demand attracted by ever-lower rates.
At a city level the highest rate of growth was in Cambridge at 11.2% and the lowest in Aberdeen at -2%, where weakness in the oil price is impacting demand for housing.
Donnell said: “City-level house prices continue to increase as demand for housing grows in the face of constrained supply. A changing mix of buyers is compounding the scarcity of housing for sale with rising numbers of first-time buyers and investors buying property while having nothing to sell.”
