The latest measure of house price rises in key UK cities by the property consultancy Hometrack shows house price in many of the urban areas in its review to be well below the level at this time last year - with London seeing by far the lowest growth.
Its 20-city price index shows growth down to 5.3 per cent, well down on the 8.7 per cent reported a year ago. In London, the contrast in house price growth from now and 12 months ago is more stark, falling from 13.0 per cent a year ago to just 3.5% per cent in April 2017.
The most unaffordable cities in southern England, such as Bristol, Cambridge, Oxford and London have all seen the rate of growth slow from double to single digits over the last year. Hometrack says this steep deceleration reflects weaker levels of demand from home owners and investors in the face of affordability constraints, tax changes and weaker market sentiment.
Elsewhere, 11 of the 20 cities are registering higher growth than at the same time a year ago.
Manchester continues to register the fastest rate of growth at 8.4 per cent, up from 6.3 per cent a year ago. The ratio of sales to new supply in Manchester indicates relatively tight housing market supply which points to continued upward pressure on house prices.
Across the Midlands, many cities are registering robust, above average growth including Leicester (7.7 per cent), Birmingham (7.7 per cent) and Nottingham (7.2 per cent). House price inflation in these cities has now surpassed the previously high growth cities such as Bristol and London, as the dynamics of the UK housing market continue to shift.
By the end of 2017, Hometrack expects house price growth in London to slow further to between 2.0 and 3.0 per cent. With the level of inflation increasing this means the capital is set to record a real terms drop in prices over 2017, the first time this has happened since 2011.
“Outside southern England, we anticipate prices will continue to increase over 2017 as households take advantage of record low mortgage rates and an improving economic outlook” says Richard Donnell, Insight Director at Hometrack.
“On paper there still remains material upside for prices in the Midlands, northern England and Scotland but much depends on how market sentiment is impacted by factors such as the General Election, Brexit negotiations and rising inflation which will create a decline in real wage growth“ he cautions.