Northern property market buoyant as London slows

A weakening in the London and SE England market has led to a slowdown in house price growth across the UK's 20 largest cities, according to the latest survey by Hometrack.

UK housing market
Outside the south of the country, however, house price inflation in many large regional cities in the north of England and Scotland have shown no signs of slowing, with Leeds, Manchester, Birmingham, Liverpool and Nottingham leading the way.The headline house price across all 20 cities rose by an average of 9.5 per cent to £240,000 in the year to July, down from 9.9 per cent in June. In the quarter to July, the average was down to 3.2 per cent, down from 3.4 per cent the previous month.Richard Donnell, insight director at Hometrack, said, “In the absence of adverse economic trends impacting employment and mortgage rates, the near term outlook is for a continued slowdown in London towards mid-single digit growth. The slowdown in London is being seen across the market is not accounted for by seasonal factors with weaker demand from homeowners and investors as supply grows.”"This analysis suggests London house price growth will continue to slow over the rest of the year. In contrast, northern regional cities will continue to register stable growth rates as households’ benefit from record low mortgages rates and affordability remains attractive. We continue to believe that turnover will register the brunt of the slowdown in London. In the face of lower sales volumes agents will look to re-price stock in line with what buyers are prepared, and can afford, to pay. Past experience shows that this process can run for as long as six months and relies, in part, in how quickly sellers are willing to adjust to what buyers are prepared to pay.”

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The slowdown in the capital saw quarterly growth slow to 2.1 per cent, its lowest rate in 17 months although, on an annual basis, the average price in London rose 11.7 per cent to £476,600. Hometrack said the London market was feeling the weight of affordability issues, property tax hikes on investors and the uncertainty surrounding the Brexit vote.Other cities in the south fared little better than the capital. Bristol, which has seen 14 per cent growth over the year to become the fastest growing city over the 12 months, saw growth over the last quarter slow to 2.6 per cent, down from five per cent in May. And prices in Cambridge fell by one per cent in the quarter, although they were still 7.1 per cent higher than a year earlier.

Hometrack UK Cities House Price Index, July 2016
(average price; per cent year-on-year; per cent quarter to July)

Glasgow - £115,200; 5.3%; 5.2%Oxford - £416,000; 10.1%; 4.7%Liverpool - £113,400; 7.7%; 4.4%Nottingham - £137,900; 7.4%; 3.4%Manchester - £147,700; 8.4%; 3.4%Edinburgh - £203,600; 2.7%; 3.1%Leicester - £152,700; 7.4%; 3.0%Newcastle - £127,400; 4.2%; 2.8%Sheffield - £129,600; 4.1%; 2.8%Bristol - £254,500; 14.0%; 2.6%Portsmouth - £216,200; 8.9%; 2.2%Birmingham - £143,300; 7.6%; 2.1%London - £476,600; 11.7%; 2.1%Aberdeen - £184,600; -8.0%; 2.1%Leeds - £151,500; 7.3%; 2.1%Cardiff - £189,200; 7.1%; 1.7%Southampton - £213,300; 8.3%; 1.7%Bournemouth - £262,600; 6.6%; 0.6%Belfast - £122,700; 2.8%; 0.1%Cambridge - £404,500; 7.1%; -1.0%

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