The UK city house price inflation has increased to 6.1 per cent with robust growth in regional cities, according to the latest house price index from Hometrack. The average price of a home in the UK was £254,700 in October 2017.
This is the highest rate of growth since September 2016 and above the UK average growth rate (4.7 per cent). House price growth remains robust in regional cities where affordability levels remain attractive and unemployment continues to fall.
Among the cities, Manchester (7.9 per cent) and Birmingham (7.3 per cent) are registering the fastest rate of growth. House prices in Aberdeen continue to fall (-3.1 per cent) while the rate of growth across London continues to stabilise (3 per cent) supported by tightening supply and lower turnover. The average price of a London home now is £496,000.
The house price to earnings ratio in London has reached an all-time high of 14.5x. Most cities outside the south east of England have price to earnings ratios that are broadly in line with the long run, 15-year, average.
Mortgage rates have fallen over this time, boosting the buying power of households. The strength of underlying economies influences the speed at which this buying power feeds into house prices.
While the London City index is registering price increases of 3%, this is being driven by outlying commuter areas