Hometrack data shows London with the slowest rate of growth for four years and the fastest house price rise is now from regional cities.
Latest city house price index from Hometrack shows London has slipped down to eighth place with growth of 6.4% per year and average home valued at £486,600.
The capitals growth is the lowest for 42 months with weaker demand as first time buyers and home movers struggle to afford inflated house prices in London.
Across the country house price inflation is running at 6.9% per year with average of £245,900 although since 2009 the rise of city house prices has been highly varied ranging from 13% to 85%.
Regional cities with strong growth
Other regional cities outside London have seen growth in house prices where the recovery to date has been muted and can continue so long as the economy continues to grow and mortgage rates remain low.
The UK cities house price index from Hometrack shows the top twenty cities growth over the last year to January 2017:
| City | Average house price | Annual change |
|---|---|---|
| Bristol | £263,200 | 9.4% |
| Oxford | £430,200 | 8.3% |
| Manchester | £150,600 | 8.3% |
| Southampton | £223,200 | 8.0% |
| Birmingham | £147,400 | 7.4% |
| Liverpool | £116,200 | 7.1% |
| Bournemouth | £275,600 | 6.6% |
| London | £486,600 | 6.4% |
| Portsmouth | £221,100 | 6.4% |
| Leicester | £160,500 | 6.0% |
| Glasgow | £115,200 | 5.7% |
| Leeds | £154,700 | 5.5% |
| Nottingham | £140,300 | 5.4% |
| Cardiff | £192,900 | 5.0% |
| Sheffield | £128,500 | 4.0% |
| Edinburgh | £200,700 | 3.7% |
| Newcastle | £123,900 | 3.5% |
| Belfast | £126,100 | 2.8% |
| Cambridge | £418,100 | 2.2% |
| Aberdeen | £183,000 | -3.7% |
The leader is Bristol up 9.5% for the year with current property price at £263,200, Oxford next with growth of 9.2% and average price of £430,200.
Manchester is the fastest growing city outside southern England where prices are up 8.3% on an average price of £150,600 followed by Birmingham with growth of 7.4% and Liverpool higher by 7.1% in the last year.
For buy-to-let landlords the lower prices in northern cities compared to the South of England may make these properties more attractive to buy.
One advantage of rising house prices for homeowners is remortgage buyers can now release capital for home improvements such as adding an extension, new kitchen or bathroom which can further increase values.
London prices up 85% since 2009
The current slowdown in London is not surprising given house prices are 85% higher than they were in 2009.
For older homeowners the considerable rise in property values allows the equity release mortgage buyer to access wealth and maintain their lifestyle, for home improvements or holidays.
Just behind London is Cambridge and Oxford recording strong price gains in excess of 75% in the last eight years which have resulted in record high price to earnings ratios in these cities.
According to Hometrack this growth is primarily a result of rising incomes and strong demand with buying power fuelled by record low mortgage rates.
The contrast to cities outside southern England is star in Newcastle, Glasgow and Liverpool with house prices just 13% to 16% higher than their post financial crisis lows.
Hometrack have said, in our view there is material upside for house prices in the coming years in many cities where the recovery since 2009 has been limited, based on previous housing cycles and the recent profile of the recovery in London.
The beneficiaries will be cities where investment in employment, infrastructure and regeneration will help stimulate the local economy.
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 are a buy-to-let investor.
Learn more by using the property value tracker chart, mortgage costs calculator and equity release mortgage calculator. Start with a free mortgage quote or call us and we can take your details.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property to consolidate debt, for home improvements or holidays.
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