Fall in London sales volumes at and end
While we expect the rate of price inflation to remain weak across London, greater realism on the part of sellers is positive news for transaction volumes which have fallen 20% since 2014.   

Discount from asking prices varies across cities
The discount from asking to sale prices provides important insight into the relative strength of local housing markets. For example, Liverpool has the second fastest rate of growth as prices rise quickly off a low base. The level of discounting in the city has narrowed over the last two years but remains above average at 4.6%. Fig.4 shows the discount from asking prices across selected cities while Table 2 contains the latest data for each city.

Lowest discounts from asking price in Manchester
Manchester has the lowest level of discounting (2.2%) across all the cities in England and Wales. This remains on a downward trend and it is no surprise the city is currently registering the fastest growth in prices.

Growth rate in Birmingham moderates
House price inflation in Birmingham has moderated over the last year and the gap between asking and achieved prices has started to plateau, standing at 2.8%. We expect a continued moderation in the rate of house price inflation over the next 12 months.

Level of discounting grows in southern England
Cities across south eastern England have registered slower price growth as affordability pressures increase. Southampton, for example, is registering annual house price growth of just 2.1% while the level of discounting has increased from 2% to almost 4% since 2017Q3.  

Prospects for 2018H2
We expect current trends to continue into the second half of 2018 as housing market forces continue to play out against the backdrop of rising employment and low mortgage rates. The main risks on the horizon are 1) the timing and scale of any increase in mortgage rates and 2) how the BREXIT negotiations unfold in the coming months and in the run up to March 2019.