City level house price growth 6.9% year on year down on 7.9% recorded in January 2016.
London drops to 8th in city rankings registering lowest rate of growth (6.4%) for 42 months.
The growth in city house prices since 2009 has been highly varied ranging from 13% to 85%. There remains material upside for house prices in large regional cities outside London.
City level house price inflation is running at 6.9% while growth in London (6.4%) is running at its lowest level for 4 years and set to slow further. House prices in many regional cities where the recovery has been muted have material upside so long as the economy continues to grow and mortgage rates remain low.
City house price growth 6.9%yoy
UK city house price inflation is running at 6.9%, compared to 7.9% in January 2016. The slower rate of growth is down to a 0.2% price fall in the third quarter of 2016. This is a consequence of weaker investor demand post the stamp duty changes and the impact of the Brexit vote on market activity.
London market going ‘ex-growth’
London has slipped to 8th in the price inflation rankings (figure 1). Year on year growth running at 6.4%, the lowest for 42 months (June 2013). House price growth is slowing across all sub-markets. The lowest capital value markets continue to register above average price growth (>8%) – areas with average prices of c.£300,000 or 40% lower than the London average.
The markets with the highest capital values in London continue to register modest year on year price falls of up to 3% as weaker demand feeds into pricing at a faster rate than in outer London areas. We expect the rate of house price inflation for the London city index to continue to slow over 2017 towards 0%.
Regional cities overtake London
London is being overtaken by large regional cities such as Birmingham, Manchester and Liverpool where prices are rising off a lower base and where affordability levels remain in line with their long run average. Manchester is the fastest growing city outside southern England where prices are up 8.3% in the last year on an average price which is a third that of London