Annual house price growth in London is only one percent with property values falling in 42% of postcodes in the capital.
Data from the Hometrack city house price index shows weak demand for property in the capital is sending property values lower with 42% of postcodes recording year-on-year price falls and 58% still with positive growth.
London house price growth is only 1% compared to the 20 city index of 5.2% with the largest falls in Cambridge of -1.5% and Aberdeen with -7.7% for the year.
The fall in house prices in these cities is good news for first time buyers as they would require a smaller deposit or lower earnings to purchase their first home.
Richard Donnell Hometrack spokesman said, average London house prices are up 86% on 2009 levels, so there is a sizeable equity buffer to absorb any price falls.
Strong growth in regional cities
Divergence in house price growth between southern England and regional cities continues with five cities rising over 7% in the year including Edinburgh, Liverpool, Leicester, Birmingham and Manchester.
For home movers the gap between their current home and the next remains large which means they need a larger deposit or mortgage for their next property.
The UK cities house price index from Hometrack shows the top twenty city average house price and annual change to February 2018.
| City | Average house price | Annual change |
|---|---|---|
| Edinburgh | £227,300 | 8.0% |
| Liverpool | £115,700 | 7.8% |
| Birmingham | £155,600 | 7.7% |
| Leicester | £171,800 | 7.7% |
| Manchester | £160,000 | 7.1% |
| Leeds | £161,000 | 6.9% |
| Nottingham | £145,600 | 6.6% |
| Sheffield | £133,700 | 6.0% |
| Cardiff | £197,600 | 5.3% |
| Portsmouth | £233,300 | 5.3% |
| Newcastle | £126,500 | 5.0% |
| Bournemouth | £283,100 | 4.9% |
| Glasgow | £119,700 | 4.5% |
| Bristol | £272,000 | 4.1% |
| Belfast | £132,600 | 3.2% |
| Southampton | £224,300 | 2.8% |
| London | £487,900 | 1.0% |
| Oxford | £409,400 | 0.5% |
| Cambridge | £429,200 | -1.5% |
| Aberdeen | £160,600 | -7.7% |
House price growth is highest in Edinburgh up 8.0% year-on-year compared to 4.4% this time last year.
For remortgage buyers these higher prices in regional cities give them an opportunity to release capital which they can use to improve their home.
For older homeowners the considerable value in their property allows the equity release buyer to access wealth using a lifetime mortgage to improve your quality of life or gift to a family member or friend.
House price falls to expand in 2018
In London house price growth has slowed to just 1% down from 4.3% a year ago and the lowest annual rate of growth since August 2011.
The weakness in London’s housing market has been building since 2015 on the back of numerous tax changes aimed at overseas and UK investors and growing affordability pressures facing home owners, says Mr Donnell.
The current coverage of markets with negative growth is the highest since the global financial crisis in 2008 and is expected to grow further in the coming months as buyers accept lower prices to achieve sales.
Inner London areas have the greatest downward pressure due to the having the highest prices, lowest yields and with a greater share of discretionary buyers.
In contrast the largest regional cities house price growth remains robust and there is no evidence of localised price falls.
Buy-to-let landlords with existing properties will benefit from the rise in house prices creating more equity which they can realise if they sell in the future.
What are your next steps?
Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or you are a buy-to-let investor.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property to repay an interest only mortgage or pay for care at home.
Learn more by using the property value tracker chart, mortgage costs calculator and equity release calculator. Start with a free mortgage quote or call us and we can take your details.
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