House price growth in cities jumped to to 11.4% last year, up from 8.9% 12 months ago, according to the latest Hometrack UK Cities House Price Index.

This is the highest rate of growth for 15 months, as demand increases and supply remains scarce, and it’s significantly higher than wider UK house price growth of 7.9% over the same period.

The three cities to record the largest rise in property values were Cambridge, London, and Bristol, seeing average prices rise by 14.4%, 13.8% and 12.8% respectively. But while prices are rising overall sales volumes across Cambridge and London look set to fall as scarcity of homes for sale and affordability pressures limit overall volumes.

Richard Donnell, insight director at Hometrack, said: “With cities the focus of economic and demographic change it is no surprise that city level house price inflation continues to run ahead of UK house price growth. The performance of house prices across these cities reflects the scarcity of supply and underlying demand for homes. Thirteen of the 20 cities have recorded continued growth in house prices for over six years with the remaining seven registering recovery in house prices for between two and four years.”

Falling prices

Aberdeen is the only city in the index to have seen house prices fall in the last year, by 1.4%, as housing demand weakens on the back of sharp drops in oil prices. Newcastle and Sheffield are recording the next lowest growth rates of 3.7%, as prices rise slowly in cities where the housing recovery is at a much earlier stage.