Hometrack’s latest UK Cities Index showed that houses in Cambridge enjoyed the highest annual rate of growth last year, followed by London at 13.8% and Bristol at 13%. Despite this, sales in London and Cambridge are unlikely to have kept pace with prices due to a scarcity of homes for sale.
The average price for a property now stands at £398,200 in Cambridge, but homes in London remain the priciest in the UK at £455,100.
House prices in 20 of the UK’s cities soared by 11% in December, up from 10% the previous month and 9% a year earlier. This represents the highest rate of growth for 15 months against a backdrop of increased demand combined with constrained housing supply.
Of the 20 cities tracked in the research, Aberdeen fared the worst for house price growth falling 1%, with Newcastle and Sheffield recording low price growth of 4%.
Richard Donnell, insight director at Hometrack, said: “Looking across the 20 cities the impetus for growth continues to come from regional cities where prices are rising off a low base as household confidence improves and home owners utilise record low mortgage rates to access the market. Glasgow and Liverpool have recorded a significant increase in house price growth over the last 12 months in cities where the recovery has been running for just two to three years.”
The report explained that strong investor demand was likely to be a key factor in some of the additional growth in house prices at a city level. Property investors accounted for one in five of all UK house purchases in 2015.
Donnell suggested that the impact of the buy-to-let Stamp Duty levy from April would bring ‘much-needed’ new supply to the market.
“Some investors may look to move before April, we expect others will need to sell to support de-leveraging of their portfolios in order to reduce tax liabilities,” he added.
“In the very near term the current momentum in house price growth looks set to translate into continued double digit price rises but we expect this to moderate as external factors start to weigh on market sentiment and affordability pressure finally catches up with high growth markets.”
