This month's Cities Index is the second in a row to record a 3.9% increase year-on-year. This is taking average prices up to a nearly 3-year high. Supply is still flat and outpaced by demand, at 2.6%.
UK city house price inflation approaches 3-year high
UK city house price growth remains at +3.9%, approaching a 3-year high. Last month we reported a strong bounce in demand. This has been reflected in the latest data for mortgage approvals (December 2019), which are up 5% compared to a year earlier. The increase in the headline rate of growth is down to a pick-up in growth across cities, especially those in southern England where pricing was broadly flat over 2019. All cities, except for Aberdeen, are recording annual house price inflation in excess of 2% per annum.
Growth in supply fails to keep pace with demand
The supply of new homes coming to the market for sale has recorded the usual seasonal uplift. Increased buyer demand will naturally bring more homes to the market. However, the total stock of homes available to buy across UK cities is just 2.6% higher than this time last year. Across nine cities the stock of homes for sale is lower than a year ago by as much as 6%.
Strong demand and growing sales are eroding available supply at a faster rate than it is being replenished. This is exacerbated where demand from first time buyers is high as this group do not have property to sell.