Over the past 12 months, home prices in Manchester increased by 8.9%, the highest rate of annual growth in the city since July 2005.
Bristol became the first city outside of the South East for more than six years to see house prices rise at a faster rate than London back in June 2016. However, fresh research shows that six cities now rank higher than the capital.
The latest Hometrack house price growth rankings reveal that Oxford, Portsmouth, Southampton, Birmingham and Manchester have all ranked higher than London over the last 12 months, as the impetus for house price growth shifts from the capital to regional cities.
Over the past 12 months, home prices in Manchester increased by 8.9%, the highest rate of annual growth in the city since July 2005. In contrast, London recorded growth of 7.3% over 2016, which is the lowest annual rate for more than three years.
But despite the slower rate of capital growth in the capital, the ratio between home values and earnings in London is now 14.2 times for the first time – the largest disparity in the country, and far above the national average of 6.5 times earnings. It suggests that there may be a period of price re-adjustment in the city over the few years.
Overall, the annual rate of home price growth across 20 of the largest UK cities hit 7.2% in 2016, taking the 20 city average to £244,300, Hometrack said.
In the fourth quarter of the year, house prices across the 20 big cities rose by 2.2%, following weak growth over Q3 of just 0.3%.
Reflecting on the latest Hometrack UK Cities Index, Richard Donnell, insight director at Hometrack, said: “This latest UK city house price index reveals how the impetus for house price growth is shifting to more affordable cities where the recovery in house prices has been more muted in recent years. Price rises are gaining momentum in cities where low mortgage rates are yet to be fully priced into housing.
“In Manchester the underlying market conditions remain strong, with the supply of homes for sale only just managing to keep pace with demand. This is keeping the upward pressure on house prices. A similar picture is emerging in other regional cities such as Birmingham and points to continued, above average price inflation in regional cities over the next 12 months.”
“2017 looks set to be a year when the north-south divide for house prices might finally start to narrow once again.”