London leads house price recovery since the crash

But affordability issues will limit future growth.

London has topped the list of cities which have seen the strongest house price recovery since the market crashed in April 2009, according to property analyst Hometrack.

Average house prices in the capital have grown 55.2% or £144,280 over the six years since the market last bottomed out.

Cambridge (£108,640) and Oxford (£100,470) showed the next strongest house price recovery out of the UK’s biggest 20 cities over a similar timeframe.

However, Hometrack says affordability pressures will limit growth in these high value markets as we go forward.

In places like London and Oxford, house prices are a whopping 12 times the average earnings, which is nearly twice the UK average of 6.3.

Cities like Edinburgh (up £17,420), Leeds (£12,890), Newcastle (£9,020) and Glasgow (£6,480), which started their recovery later, will drive future growth as affordability in these areas is more favourable at nearer three to six times average earnings.

How city house prices have recovered

Here’s how London’s house price recovery compared to other cities in the UK. The table is ordered by the number of years in recovery.

City	Years in recovery	Date since last trough	Price gains since trough	% gain
Aberdeen	6.3	Oct-08	£49,459	33.4%
Cambridge	6	Jan-09	£108,637	48.8%
Oxford	5.8	Mar-09	£100,470	42.1%
Bristol	5.8	Mar-09	£54,539	33.6%
Bournemouth	5.8	Mar-09	£46,533	23.7%
Southampton	5.8	Mar-09	£36,997	24.1%
Nottingham	5.8	Mar-09	£17,704	16.0%
London	5.8	Apr-09	£144,278	55.2%
Portsmouth	5.8	Apr-09	£37,582	23.8%
Cardiff	5.8	Apr-09	£30,433	20.3%
Leicester	5.8	Apr-09	£20,021	16.1%
Manchester	5.8	Apr-09	£13,161	10.6%
Birmingham	5.7	May-09	£13,006	10.8%
Sheffield	3.2	Nov-11	£11,947	10.4%
Glasgow	2.5	Jul-12	£6,482	6.3%
Leeds	2.3	Oct-12	£12,886	10.1%
Edinburgh	2.2	Nov-12	£17,416	10.2%
Newcastle	2	Jan-13	£9,021	8.0%
Liverpool	2	Jan-13	£7,857	7.8%
Belfast	1.6	Jun-13	£12,528	12.2%

Source: Hometrack UK Cities House Price Index

As you can see the recovery of house price growth is spread across two groups of cities; those where house prices bottomed out five to six years ago and those where recovery has only started in the last two to three years.

13 UK cities have been recovering since 2008/2009 but the strength ranges from a subdued £13,160 in Birmingham to a whopping £144,280 in London, which Hometrack says reflects the strength of the local economies and demand for housing in the areas.

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City house price hotspots

Overall in the UK house prices rose by 7.9% in the 12 months to January 2015, taking the average price of a property to £185,800.

On a city level Aberdeen saw the biggest house price inflation over the last year.

House prices in the Scottish city rose by 16.4% in the 12 months to January 2015, taking the cost of an average property to £197,600.

The increase outstripped property inflation in London (13.6%) and Bristol (10.8%), which were the only other cities to see double digit growth over the same period.

Here’s how all 20 cities measured up:

City	Average house price January 2015	% change year on year	% change compared to 2007	Average growth per month last three months
Aberdeen	£197,600	16.40%	16.10%	0.40%
London	£405,500	13.60%	30.70%	0.50%
Bristol	£217,000	10.80%	8.20%	0.20%
Cardiff	£180,100	8.80%	1.40%	0.80%
Oxford	£338,900	8.60%	20.40%	-0.20%
Portsmouth	£195,200	8.30%	4.80%	0.30%
Southampton	£190,400	7.80%	4.10%	0.30%
Sheffield	£126,900	7.00%	-4.80%	0.80%
Belfast	£115,600	6.50%	-50.00%	-0.20%
Edinburgh	£189,000	6.40%	-8.90%	-0.80%
Leeds	£139,900	6.30%	-8.90%	0.40%
Manchester	£136,800	6.20%	-7.50%	0.40%
Bournemouth	£243,100	6.20%	1.90%	0.10%
Leicester	£144,200	5.90%	-2.10%	0.20%
Nottingham	£128,700	5.80%	-2.90%	0.00%
Birmingham	£133,400	5.30%	-6.20%	0.10%
Cambridge	£331,200	5.30%	24.00%	-1.30%
Newcastle	£122,100	4.90%	-10.10%	0.10%
Liverpool	£108,700	4.70%	-15.20%	0.70%
Glasgow	£108,700	4.10%	-14.60%	0.60%

Source: Hometrack UK Cities House Price Index

As you can see nine cities have now surpassed their 2007 peak, with London up by nearly a third. All apart from Aberdeen and Cardiff are found in the south of England.

However, some are still struggling with Belfast, Glasgow, Liverpool and Newcastle seeing double digit falls since the house price peak.

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