Manchester witnessed the fastest house-price growth in August as property prices climbed by 7.3 per cent year-on-year.
The latest Hometrack UK Cities house price index shows strong gains in regional cities, while London continues to lag behind and peg back the national rate of increase.
Birmingham (6.7 per cent), Edinburgh (6.6 per cent), Leicester (6.4 per cent) and Nottingham (6.2 per cent) also performed strongly in August, the index revealed.
In London, however, the annual growth rate was just 1.9 per cent – down from 10 per cent during August 2016.
Only Aberdeen, where prices dropped by 1.9 per cent, saw weaker growth in the 20-city index.
But several other cities that have recently enjoyed strong growth, such as Cambridge (2.8 per cent) and Oxford (3.8 per cent), have also registered a steep slowdown in the rate of house price inflation over the last 12 months as affordability pressures constrain housing demand.
Economic growth in Manchester has outstripped that in the capital since 2014, partly as a result of the government’s Northern Powerhouse agenda.
In July, a report produced by Irwin Mitchell and the Centre for Economics and Business Research for UK Powerhouse revealed the economy of Greater Manchester had grown by 7.5 per cent since the end of June 2014, compared to inner London’s 6.9 per cent.
Meanwhile, Savills has revealed take-up of office space in Manchester was up 20 per cent year-on-year in the first half of 2017.
The average house price in Manchester is £158,000, compared to £489,100 In London, according to Hometrack.
Across UK cities, the headline growth rate was 4.9 per cent compared to 6.6 per cent in August 2016.
Richard Donnell, research and insight director at Hometrack, said: “House prices continue to rise on the back of sustained price inflation in large regional cities as unemployment falls and mortgage rates remain low.
"Weak growth in London is acting as a drag on the headline rate of growth. We expect this pattern to remain a feature of the market for the rest of the year and into 2018.
“The accumulation of housing equity from rising house prices means there is a major opportunity from innovation in financial and housing products to help households leverage or access housing equity. This is a complex and evolving market with consumer demands being shaped by demographic and economic change.”
simon.allin@ft.com
