You are here: Home - News -

London drags down city level house price growth

by: Heather Greig-Smith
  • 24/03/2017
  • 0
London drags down city level house price growth
House price growth is down 1.4% from last year at a UK city level.

According to the latest Hometrack UK Cities House Price Index, inflation is running at 6.4% across the country – compared to 7.8% in 2016.

Affordability pressures continue to hit high value cities in southern England while supply and demand dynamics are not strong enough in many regional cities outside the south to support double digit rates of house price growth.

London’s slowdown is still notable. Its 5.6% rate of annual increase, the lowest level since 2013, has seen the capital fall to tenth place in the list of the fastest growing cities. Slower growth in London is also acting as a drag on headline growth.

By contrast, Manchester is registering the highest rate of growth at 8.8%.

Hometrack said turnover has been flat or falling in the highest value, least affordable cities like London and Bristol. This is a result of weaker investor demand, the impact of the Brexit vote on buyer sentiment and stretched affordability levels.

Sales levels in these cities peaked in 2014/2015 and in London overall sales volumes are now down 8% since 2015. This would be greater without the surge in investors buying before Stamp Duty changes were made in April 2016.

Falling oil prices have hit Aberdeen – it has suffered a 5.9% annual drop in prices as a result and is the only city to register falls.

Meanwhile Manchester and other regional cities such as Liverpool, Leicester and Birmingham have recorded significant surges in transaction volumes of between 30%-40%+ over the past three years as buyers return to the market supported by an improving jobs market and record low mortgage rates.

Richard Donnell (pictured), insight director at Hometrack, said levels of housing turnover across UK cities are expected to remain broadly flat over 2017.

“There is some further upside for sales volume in regional cities but much depends upon how would-be buyers respond to external factors, not least the impact of lower real wage growth, the potential for higher mortgage rates and whether demand will be impacted by the triggering of Article 50 at the end of the month,” he said.

Donnell added: “Buyers are fully aware of the government’s plans and timescales for Brexit but there remains huge uncertainty over what this means for the economy over the next two to three years and beyond. In cities where affordability remains attractive we expect demand to hold up in the short term albeit with slower growth in sales volumes. Overall we continue to expect the rate of house price growth to moderate over the rest of 2017.”

Table 1: City level summary, February 2017


There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.


Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.


Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.


Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
  • Jo Wilson from Legal & General Home Finance talks about her Best BDM nomination and her love for the equity release…
  • Sponsored content: Four reasons your client wants a product transfer by Halifax Intermediaries…
  • Nationwide trims rates as Accord ups cashback on buy-to-let deals -

Read previous post:
Young Brits feel shut out of homeownership

A quarter of young Brits are certain they will never own their own home.