Regional house prices shrug off Brexit impact

Hometrack has upped its forecast for city house price growth in 2017 to between 6 and 7 per cent following a strong performance in the first half of the year.

Back in December, it was predicting growth of just 4 per cent.

But while London has seen house price inflation fall to a five-year low of just 2.6 per cent, Hometrack reported the impact of the Brexit vote has been much less pronounced in the rest of the country.

Birmingham tops June’s UK cities house price index with 7.8 per cent annual price growth, and further gains are expected during the rest of the year.

The average price of a property in Birmingham is £154,900 - less than a third of that in London, with record low mortgage rates and falling unemployment boosting buyer sentiment.

Other large regional cities outside the south of England, such as Manchester and Leeds, continued to see robust growth of between 6 and 7 per cent a year.

In contrast, Bristol, Oxford and Cambridge have all witnessed a marked slowdown in the rate of house price growth, which is down by between 6 per cent and 10 per cent over the past 12 months 

In Oxford and Cambridge house price growth, at 2.1 per cent and 1.9 per cent respectively, has dipped below the rate of general inflation (2.6 per cent) as measured by CPI, meaning house prices are falling in real terms for the first time since March 2012.

Richard Donnell, research and insight director at Hometrack, said: “Despite a material slowdown in the rate of house price growth in south eastern England, the headline rate of city house price inflation is holding up, despite the squeeze on real incomes and uncertainty around Brexit. 

“The Brexit impact was greatest over the second half of 2016 but house price growth has picked up over the last six months. This is consistent with an 11 per cent increase in the number of home purchase mortgages, which is also 5 per cent higher than the five year average.”

simon.allin@ft.com