City growth trumps earnings
This is more than treble average yearly wage growth of 1.3%.
The three cities with the highest property price growth year-on-year are London (17.3%), Bristol (13.2%) and Cambridge (12.2%) although momentum in these markets is said to be slowing.
The lowest house price growth was recorded in Glasgow (5.5%) and Liverpool (5.5%), but these cities are reportedly starting to see growth accelerate.
Since the Scottish referendum Edinburgh and Glasgow’s house prices have seen a bounce, with average prices increasing by 4.1% and 2.2% respectively in the last quarter alone.
In the last three months UK house price growth has slowed, increasing by 0.6% per month compared to 1.1% in the three months to May.
Richard Donnell, research director of Hometrack, said: “Momentum in house price increases is starting to slow with less pent-up demand for housing than two years ago.
“Whilst mortgage rates remain low, new mortgage affordability tests and loan to income caps are impacting on the ability of marginal buyers to access the market, especially in the higher value markets such as London.
“We expect the rate of house price growth to slow further in the run up to the year end.”
The index said that while growth in most cities is decelerating cities with the lowest growth in spring 2014 – Glasgow, Edinburgh and Newcastle – are seeing prices accelerate.
However average prices decrease by 1.2% and 2.3% in Oxford and Cambridge in the last three months after seeing strong gains of 42% and 52% in the last four years.
House prices in Liverpool and Glasgow are currently 41% lower than the UK average, while on the flipside London’s prices are 117% more expensive than the UK average.
Donnell added: “There are still bright spots of activity amid reports of a wider national slowdown.
“For the first time since the financial crisis, an improved economic outlook has seen house prices in cities outside the south of England rising off a low base.
“By the end of the year, we could well see monthly house price growth in London slipping below that of some of major cities outside the south east.”