The average price of a home across the UK’s main cities now stands at £252,700.
House prices in key UK cities have proved resilient so far this year in a time of uncertainty, with growth of 5.3% in the 12 months to July, the latest Hometrack index figures show.
Unsurprisingly, the middle and northern parts of England, such as Birmingham, Manchester and Nottingham, offer the best performing cities in terms of property price growth, thanks primarily to the fact that affordability remains attractive, compared to say London and the South East of England.
The property price index reveals that house price growth in the 20 cities under review is led by gains in Birmingham, where prices have increased by an average of 8% compared with the same month a year earlier, thanks to strong demand from buyers, including many investors, as consumer confidence remains firm despite political and economic instability.
But many of these large regional cities still have a long way to catch up with long-term growth in places such as London, Cambridge and Bristol, where prices have increased by up to 60% since over the past decade.
Table 1: City level summary, July 2017
|City||Average price||%yoy Jul-16||%yoy|
|20 city index||£252,700||7.4%||5.3%||-2.1%|
Source: Hometrack UK City House Price Index
Although there was a slight improvement, London remains one of the worst performers for UK growth as homebuyers look to get more for their money by venturing outside the capital.
London has seen a sharp declaration in growth, on the back of weaker levels of demand from buyers in the face of affordability constraints, tax changes and weaker market sentiment.
In the capital, property price growth has fallen from 13% a year ago to just 2.8% in July 2017, and there is every change that growth may slow further, and with the level of inflation increasing this means that the capital could actually see a real terms drop in property prices over 2017, which would be the first annual fall for six years.
Looking ahead we expect current trends to continue with property price growth losing momentum in cities across southern England, due mainly to affordability constraints.
Outside southern England, Property Price Advice forecast that home prices will be sustained at existing levels between now and the end of the year, as households continue to take advantage of record low mortgage rates, although much depends on how market sentiment is impacted by political and economic uncertainty and declining real wage growth.