House prices increased by 7.9 per cent over the year to January, although this was down from 8.1 per cent recorded in December, according to Hometrack’s UK cities house price index.
The underlying three month annualised rate of growth stands at 4.6 per cent, with the weakest performing cities registering positive growth for the last five months.
The profile of this recovery trend splits into two distinct groups, according to the residential property market specialist. Cities where the recovery has run for five to six years and others where the recovery in price has been less than two years.
City level house price inflation ranges from 4.1 per cent in Glasgow to 16.3 per cent in Aberdeen. London saw a 13.6 increase last year.
Earlier this week, the ONS said that UK house prices increased by 9.8 per cent in the year to December.
At the end of last month, Nationwide’s monthly house price index showed annual growth continued to slow at the start of 2015, with the rate of value inflation dropping for a fifth consecutive month in January on the back of a modest monthly figure.
Last week, LSL’s house price index added further weight to the trend, stating that house prices have slowed to the smallest yearly improvement witnessed for 10 months, at 7.5 per cent annual growth, representing a deceleration from 8.9 per cent in December.
Jeremy Duncombe, director of Legal and General Mortgage Club, commented that today’s data confirms that house prices are still rising.
“However, we are still experiencing a two-speed housing market; there is a wide gap between the rate of growth in different cities.
“Demand still far outstrips supply, and the UK needs to build 240,000 new homes each year to enable the market to grow in a more sustainable way and reduce the number of people being priced out of home ownership.”
He added that the housing crisis needs to remain firmly at the top of the political agenda in the run up to the general election.
peter.walker@ft.com
