House prices are growing at twice the rate of wage inflation in a quarter of UK cities

House prices in eight of the UK’s biggest cities are now increasing twice as fast as wages according to new data.

The figures, released by property data company Hometrack, found that average house prices across Liverpool, Birmingham, Leicester, Manchester and Glasgow are growing at up to 6.9% a year, far above wage inflation which currently stands at 2.7%.

Liverpool has seen the highest increase in annual property values, sitting at 6.9% following by Birmingham (6.5%), Leicester (6.4%) and 6.2% in Manchester and Glasgow.

Across the country as a whole, house prices are up 3.2% in the UK’s 20 largest cities, 0.5% ahead of wage inflation.

Insight Director at Hometrack, Richard Donnell said of the results: “City-level house price growth remains well above average in the most affordable cities.

“While the rate of growth has moderated slightly, prices in five cities are still rising twice as fast as the growth in earnings.

“We expect continued price growth in the most affordable markets over the remainder of the year.”

Of the 20 city-index, only Aberdeen as recorded negative growth (-4.4% year-on-year to September 2018) whilst continued growth in Manchester and Liverpool has seen average house prices rise to £167,800 and £120,500 respectively.

Read more: North West cities amongst the most improved in the UK

The highest average house prices outside the capital can be found in Oxford, now £423,400 following 5.5% price growth and Cambridge, now £435,600 following a more modest 0.4% increase.

Prices in London still remain the highest in the UK, standing at £484,400, despite a negative growth of -0.4% over the last twelve months.

Bad news for would-be home buyers?

Whilst Hometrack’s data may paint a rather bleak picture for would be property buyers, it all depends on how you interpret the data.

For example, with wage inflation currently at 2.7%, properties are becoming proportionally more affordable for residents in Aberdeen, London, Cambridge, Bristol and Southampton whilst price growth in Newcastle and Portsmouth sits only just above wage growth.

Read more: First-time buyers now account for half of all new mortgages

Meanwhile, in the highest-growth cities such as Liverpool, Birmingham, Glasgow and Sheffield, average house prices still remain some of the most affordable in the country, whereas negative growth in London, for example, would little help many first-time buyers as average prices continue to hover near the £500,000 mark.

Even a 5% deposit in the capital would require a £24,220 down payment. Meanwhile, a 5% deposit to secure a property in Liverpool would cost just £6,025 – despite the area seeing the highest annual property price growth in the UK.