Projections from Hometrack is to expect above average house price growth from regional cities to offset lower price growth in London.
The latest data from Hometrack shows city average house prices are £205,000 with growth for November is slightly higher than last year at 7.7% and inline with their projections made a year ago.
Cambridge has recorded the greatest slowdown in the rate of growth in 2016 down from 12.5% last year to 2.5% today.
London has also lost momentum with house prices dissipating since the Brexit vote with growth down to 7.6%, the lowest level since August 2013.
The slowdown in house prices will be welcome news to first time buyers struggling to buy their first home although most properties remain unaffordable.
Three distinct city level trends
From the current house price growth data there are three distinct trends for price increases of UK cities referred to as accelerating cities, strong steady growth and falling.
This is based on the UK cities house price index from Hometrack shows the top twenty cities growth over the last year to November 2016:
| City | Average house price | Annual change |
|---|---|---|
| Bristol | £259,700 | 9.9% |
| Portsmouth | £220,800 | 7.9% |
| Birmingham | £147,000 | 7.7% |
| London | £483,300 | 7.6% |
| Southampton | £219,600 | 7.2% |
| Manchester | £148,300 | 7.1% |
| Nottingham | £141,100 | 6.9% |
| Leeds | £155,100 | 6.2% |
| Leicester | £157,700 | 6.2% |
| Glasgow | £117,100 | 6.1% |
| Cardiff | £192,500 | 6.0% |
| Liverpool | £113,700 | 5.6% |
| Oxford | £411,100 | 5.3% |
| Sheffield | £129,800 | 5.3% |
| Bournemouth | £270,100 | 5.1% |
| Edinburgh | £205,100 | 3.8% |
| Newcastle | £122,700 | 2.8% |
| Cambridge | £417,800 | 2.4% |
| Belfast | £126,700 | 1.3% |
| Aberdeen | £183,000 | -6.5% |
Firstly, accelerating cities includes London, Oxford, Cambridge, Bournemouth and Bristol which have benefited from high growth over the past five years and are now suffering from stretched affordability levels and falling sales volumes.
For buy-to-let landlords with existing properties the rise in house prices in the last five years has created more equity which they can benefit from if they sell in the future.
Secondly, strong steady growth includes Birmingham, Manchester, Leeds, Leicester, Nottingham and Portsmouth with robust house price growth of 5 to 8% per year based on strong market conditions.
The rise in house prices allows the older equity release buyer to access wealth in their property with a lifetime mortgage, using this to maintain your lifestyle, holidays or home improvements.
Thirdly, falling with just one city, Aberdeen with a fall in house prices of -6.5% over the year following the 50% fall in oil prices since mid 2014 has impacted the local community.
City house price growth for 2017
Since the financial crisis house price growth for London has averaged an 84% uplift with Cambridge on 81%, Oxford with 67% and Bristol on 62%.
Remortgage buyers can benefit from higher prices in these cities giving them an opportunity to release capital which they can use to improve their home.
For home movers the gap between their current home and the next increases which means they need a larger mortgage.
Looking ahead for 2017 Hometrack expects weaker growth in real household incomes and Brexit to impact the economy particularly in southern England.
Affordability pressures on homeowners are most extended in cities and impacting demand coupled with tougher underwriting standards for mortgage borrowers.
Hometrack are projecting a slowdown in house price growth for UK cities compared to previous years to 4.0% for 2017.
London is expected to have house price growth of 2.0% as affordability levels become more stretched with 5.0% lower sales volumes for London, Aberdeen, Bristol and Cambridge.
Even so, Hometrack believe the underlying fundamentals in these markets remain attractive and there is potential for further price appreciation over 2017.
What are your next steps?
Talk to our London City Mortgage brokers for advice if you remortgage your existing home and want the best mortgage deal or release capital, buying your first home, moving home or are a buy-to-let investor.
For older homeowners releasing equity from your property, our LCM mortgage advisers can recommend the lifetime mortgage, accessing wealth to gift to a family member or even buy a more expensive home.
Learn more by using the equity release calculator, mortgage monthly cost calculators, and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.
Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.
