Regional house prices surge as London stagnates

Regional house prices surge as London stagnates

Edinburgh and Manchester are leading the way for house price growth, according to the latest Hometrack UK Cities House Price Index.

The index, which tracks house prices across 20 UK cities, found regional hubs were thriving.

Edinburgh and Manchester recorded house price inflation of 7.1 per cent and 7 per cent respectively over the past 12 months.

Average house price growth for UK cities for the year was 4.6 per cent. The average price across the cities included the index was now £257,200.

Two cities have seen house prices fall over the past year. In Aberdeen the average property value is down 5.7 per cent to £178,300, while prices slipped 0.9 per cent in Cambridge to £433,800. London was only just in the black, with prices up 0.4 per cent to an average of £491,200 over the year.

But Hometrack said in real terms five cities had seen prices fall: Oxford, Cambridge, Aberdeen, London and Belfast.

David Hollingworth, associate director at London & Country, said: "These figures underline just how differently regional housing markets can perform. That’s not a new phenomenon, of course, but as the pressure of high prices begins to bite in more costly areas, it’s those places where property remains more affordable that are seeing ongoing increases in prices.

"Continued speculation around rate rises will do little to encourage buyers in those areas where prices are already putting a squeeze on affordability."

In the capital, price performance across the London boroughs was varied. Prices in Havering, Waltham Forest and Redbridge were up 2 per cent, leading the way. At the other end of the spectrum, prices in the City of London were down 3.2 per cent year-on-year and by 2.9 per cent in Camden.

The research comes as the latest Nationwide House Price index revealed house price growth across the UK was at its slowest rate in five years. Property prices climbed 2 per cent in the year to May to an average of £214,578, with most regions seeing a slowdown.

Richard Donnell, insight director at Hometrack, said: "The relative price gap between cities fluctuates over the course of the housing cycle as supply and demand is affected by factors such as economic growth, job creation, wage increases and the flow of new investment.

"We expect prices to keep rising across regional cities such as Edinburgh over the next two to three years and think Manchester and Birmingham will close the gap to London fastest in the coming years as these cities are likely to see the strongest jobs growth."