House prices in key UK cities increases by an average of 1.4% in the three months to April, the highest three month rate of growth for a decade.
Overall growth is being supported by house prices playing catch-up with average prices in 11 cities still below their 2007 peak with Belfast down 49.1%, Liverpool down 14.9% and Glasgow down 13.6%.
The data from the Hometrack UK Cities House Price Index also shows that despite a recent pick up in housing turnover, the average time between moves in some cities is up to 28 years, twice the average between 2003 and 2007 which was a move every 14 years.
It explains that a 30% decline in the proportion of moves by existing mortgaged home owners over the last decade is starving the market of a source of new supply and driving prices up.
House price growth across the index is running at an average of 9% and continues to exceed the overall UK rate of growth of 6.8% year on year.
At a city level the annual rate of growth ranges from 3.5% in Liverpool to 11% in London. This is the smallest spread in city level house prices since 1996, as the rate of growth in high value markets such as London and Cambridge moderates whilst house prices in regional cities continue to recover off a low base. However, 11 of the 20 cities have house prices that are still below their 2007 peak.
The index report says that house price increases are being driven by the improving economic outlook boosting market sentiment, record low mortgage rates and a low churn of housing stock which is creating scarcity of supply.
The average number of years between moves is calculated from the number of housing sales in a year relative to the stock of private housing in each city. In the 1980s, the average house was changing hands every 10 years and this increased to an average of 14 years between 2003 and 2007. This has now climbed to an average of 21 years cross all cities and is as high as 28 years in some cities such as Liverpool.
‘Home buyers and investors shrugged off the run up to the general election and continued to bid up the cost of housing,’ said Richard Donnell, director of research at residential analyst Hometrack.
‘Record low mortgage rates, which are more than half the level of 2007, are boosting buying power, while low rates of housing turnover creates housing scarcity and is keeping an upward pressure on house prices,’ he explained.
He pointed out that one factor driving housing scarcity has been a marked decline in the proportion of housing sales by existing mortgaged home owners, down to just 35% of all sales in 2014 and almost half the level seen in 2007. ‘This group owns half of all owner occupied housing but fewer moves by existing mortgaged home owners is starving the market of a source of new supply,’ said Donnell.
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Source: Property News Spain