Manchester and Birmingham see discount halve Birmingham and Manchester have recorded the greatest decrease in discounts over the last year. Figure 2 shows how the discount has more than halved from 6% in 2013 to just 2.7% in 2017. This is more evidence of the underlying strength of the market in these cities. Not only are headline prices growing at 6%-8% per annum but discounts to listing price are narrowing. A similar pattern has been recorded for cities outside southern England (Fig.3). This supports our view that there is further above average house price growth to come over 2018. Sales prices at a premium in Edinburgh and Glasgow The Scottish system for selling homes is different to England and Wales with property typically marketed as ‘offers over’ a listing price. Our analysis shows that sales values are at a premium to listings prices. The premium has increased over 2017 to average 4% in Glasgow and 7% in Edinburgh (Fig.3). This is consistent with robust levels of price inflation currently being recorded in these cities and reports of a shortage of homes for sale. Increased discounting in London as demand weakens London has registered increased levels of discounting. In 2014, when the rate of house price growth was almost 20% per annum, the average discount to asking price was just 0.5%. Weaker, price sensitive demand has seen the discount widen to an average of 4% with the largest discounts of up to 10% being registered in inner London where price falls are most concentrated. Larger discounts point to headline price falls The level of discounting provides insight into the strength of underlying demand. Asking prices tend to act as the ‘shock absorber’ to softer pricing as demand weakens. However, once discounts get close to 10%, this is when falls in headline prices start to occur.