The latest data from Hometrack has found that, on average, house price groth in UK cities remains steady at 8.5% per annum, up from 5.7% twelve months ago. However, growth in London has slowed rapidly to its lowest level of quarterly growth for 20 months.
According to the data, eleven cities are registering higher growth than at the start of 2016. The majority of these are large regional cities outside the south east of England – Liverpool, Manchester, Cardiff and Birmingham.
Nine cities are registering house price growth lower than at the start of 2016 with the greatest slowdown led by Cambridge, Oxford, London and Aberdeen.
In the last quarter, London residential values have recorded their lowest growth rate since January 2015. Hometrack has attributed the decline in demand to fears of a potential housing bubble, tightening credit terms and concerns over a mansion tax.
In the last quarter, London residential values have increased by 0.9%, compared to an average of 3.0% over the last 3 years. The recent slowdown is yet to impact the annual rate of growth which is running at 10% but is expected to move towards 5% by the year end.
Demand for property across the rest of the UK also remains strong, highlighted by the steady annual rise of house price growth in cities such as Liverpool and Manchester.
Despite this, there remains a gross imbalance between supply and demand. London house prices are still up 10% annually and until more homes are built to meet soaring levels of demand, prices will only continue their upward climb.”
Jeremy Duncombe, Director, Legal & General Mortgage Club, commented: “It’s no shock to see a modest deceleration in house price growth over the summer months and we shouldn’t rush to assume that a correction like this is just the result of the recent political climate. While the slowing of house price growth will be welcomed by some in the ongoing battle against unaffordable housing, it shouldn’t distract from what the facts show: House prices are still going up at an unsustainable rate – well above the yearly wage increase of the average Briton. The only way this deepening problem will be resolved, is if the Government commits to building hundreds of thousands of new, affordable homes.
Fortunately, we are now seeing signs that the new Government is making this issue a priority, and hopefully through strategic planning we will see changes made sooner rather than later.