MortgagesMay 30 2018

House price growth in cities slows

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House price growth in cities slows

House price inflation across UK cities slowed to 4.9 per cent in the year to April, according to the latest Hometrack House Price Index.

It’s a sharp fall from the 6.9 per cent annual house price inflation recorded over the past five years but it above the UK average of 4.5 per cent.

Average house prices across 20 major UK cities climbed to £252,600 in April, up from £250,500 the previous month.

City house prices increased 2.9 per cent over the past three months, compared to a fall of 0.5 per cent in the final three months of 2017.

Over the past year Manchester saw the greatest growth, with house prices up 7.7 per cent to £161,700, closely followed by Leicester where prices increased 7.4 per cent to £171,000.

Just one of the 20 cities in the index saw house prices fall: Aberdeen, which saw property prices drop 7.2 per cent to £173,200 in the year.

Hometrack said demand in Aberdeen, a major centre of the British oil industry, had been hit by lower oil prices, with house prices down 19 per cent since the end of 2014.

Meanwhile, prices in 16 of 46 local authorities in London recorded negative growth, with many buyers priced out of the market.

Alan Collett, fund manager at Hearthstone Investments, said: "The results for April are in line with our experience that, while part of London continue to post modest falls in house prices, the picture varies considerably across the capital.

"We are also seeing resilience in other parts of the country, particularly in the Midlands and northern regions of the UK."

Over a five-year period, Bristol saw the highest growth at a compounded annual rate of 8.9 per cent.

Hometrack said large regional cities such as Birmingham, Nottingham and Sheffield were also among the best performers and that prices were likely to keep rising as affordability levels were attractive and employment opportunities rising.

Performance was weaker across the south coast in cities such as Southampton and Portsmouth were affordability was worsening.

Steve Seal, marketing director of Bluestone Mortgages, said: "It is difficult to adopt a one-size fits all approach to balancing supply and demand of housing when these results show the significant variations across the regions.

"All regions certainly need more affordable housing but, in areas like London, the majority of first-time buyers still find themselves priced out of the market or having to rely heavily on the Bank of Mum and Dad."