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House Price Inflation for UK Cities Ended 2018 At 2.7%

Residential property prices increased year-on-year by an average of more than 6% in Edinburgh and Liverpool

Edinburgh tops price inflation in 2018 with prices up 6.8% annually compared to 2.7% for the rest of the UK

House price inflation for UK cities in 2018 was half the average annual rate recorded over the last 5 years, although some have registered double-digit growth since the EU referendum in June 2016.

The findings, revealed in the latest UK Cities House Price Index by Hometrack, show house prices increased by 2.7% in the 20-city index and 2.9% across the UK in 2018, both lower than their respective rates at the end of 2017 of 3.3% and 3.7%.

London, Cambridge, and Aberdeen registered year-on-year price falls of 0.2%, 3.8% and 6.1% respectively, whilst at the top end Edinburgh and Liverpool registered house price growth of more than 6.0%.

This was followed closely by Birmingham, Nottingham, and Cardiff with 5.9%, Manchester with 5.8%, Leeds with 5.7%, and Sheffield with 5.4%.

Analysis of prices since the recession in 2008 reveals high unemployment and low wage growth contributed to negative inflation in several large cities, with London leading a bounce in price after the recession in 2010.

Hometrack identifies three distinct phases of how prices have developed since 2009; an early recovery between 2009-2012, a more robust recovery from 2013 to mid-2016, and inflation post-Brexit since June 2016.

It reveals that, since the EU referendum, house price inflation has hit double-digit figures in ten cities in the UK, led by Birmingham (16%) and Manchester (15%).

Looking ahead, Hometrack expects first-time buyers will be the main driving force behind future housing demand in 2019, especially in the regional cities which have thriving jobs markets and more affordable housing.

Buyer demand jumped by 13% throughout 2018 according to the latest report by NAEA Propertymark, although the proportion of sales to first-time buyers fell on an annual basis.

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