Hometrack’s UK Cities House Price Index found that prices in UK cities rose by 3.7% in the third quarter to reach £229,300.
Cities recording the strongest quarterly growth were London (4.1%), Glasgow (4.0%), Oxford (3.6%) and Bristol (3.6%), while Aberdeen (-1.0%) was the only city to see negative growth.
City growth exceeded general UK property growth annually and quarterly, as prices rose by 7.1% annually and 2.6% for the UK as a whole.
Richard Donnell, director of research at Hometrack, said: “Improving consumer confidence and low mortgage rates are boosting demand in cities where the recovery in house prices is in its infancy.
“Further house price growth is likely to improve market confidence as it pushes down loan to values on mortgaged homes and creates capacity for households to access cheaper credit.
“Many corporate investors and developers are looking to the major regional cities in search of better value for money in new investments relative to London.
“The outlook for the next 12 to 18 months will be a balance between how much the high growth cities slow on affordability pressures and how much more momentum will come from cities where the pick-up in house prices is just beginning to pick up.”
Hometrack also compared house prices in UK cities to 2007 levels. Cambridge (44.7%), London (44.4%) and Oxford (37.4%) are well ahead of 2007 but Belfast (-47.2%), Liverpool (-13.3%) and Glasgow (-9.7%) still trail 2007 levels.
Donnell added: “While southern cities have been in recovery mode for over 6 years with price gains of up to 70%, the large regional cities have seen far more modest price rises over just the last 3 years.”
