London becomes a 'drag' on housing market

London becomes a 'drag' on housing market

House prices across the UK's top 20 major cities are up 2.9 per cent over the 12 months to January 2019 but London has become a 'drag' on the housing market.

The latest Hometrack Cities Index showed prices are rising fastest in Leicester (6 per cent) followed by Belfast (5.8 per cent) and Manchester (5.4 per cent).

Prices continue to fall in Aberdeen (minus 1.6 per cent) where average values are £34,000 lower than mid-2015 at the time of the collapse in the oil price.

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London house price inflation was virtually flat at 0.2 per cent.

Thirteen cities are registering weaker growth than a year ago as a result of affordability pressures and increased uncertainty.

The sharpest slowdown in the rate of growth has been registered in Edinburgh, Bournemouth, Portsmouth and Bristol.

Bristol, for example, is recording annual house price growth of 1.8 per cent, the lowest rate for more than five years (September 2012) as affordability pressures impact demand.

Marc von Grundherr, director of estate agents Benham and Reeves, said: "City living remains a popular choice across the UK despite these more built up, urban hubs being most at risk in the event of a messy EU departure.

"This price growth continues to be driven by affordable locations at the bottom end of the house price ladder and in these slower market conditions, it's only natural that the more desirable UK cities will see prices growth flatten and the time to sell extend, due to the already inflated price of getting a foot on the ladder there.

"Of course, the commitment of investing in the inner London market at present is likely to take a bit more thought than it may have previously, but to label London as a 'drag' and to liken the market strength to that of Aberdeen is a tad misleading.

"Prices are holding firm, transactions are steady and London remains the pinnacle of the UK housing market, having emerged from the negative price trends of the previous year."