Whilst 11 cities have a faster rate of growth than 12 months ago...
City house price growth 5.3%
UK city house price inflation has slowed to 5.3%, down from 8.7% in April 2016. In the three months to April 2017, average prices have increased by 3.2% with above-average growth recorded in large cities such as Manchester (4%), Birmingham (3.8%) and Edinburgh (3.7%).
Divergence in growth rates over last year
Eleven of the 20 cities are registering higher growth than at the same time a year ago. Annual price growth is lower across nine cities with a material slowdown in the highest value, most unaffordable cities such as London. Manchester continues to register the fastest growth rate of 8.4%, up from 6.3% a year ago.
Cities in the Midlands registering robust growth
Other cities with above average growth include Leicester (7.7%), Birmingham (7.7%) and Nottingham (7.2%). The rates of growth in regional cities are overtaking growth in previously high-growth cities such as Bristol and London.
Rapid price deceleration in most unaffordable cities
London, Cambridge, Oxford and Bristol have all seen the rate of growth slow from double to single digits over the last year. This steep deceleration in growth reflects weaker levels of demand from homeowners and investors in the face of affordability constraints, tax changes and weaker market sentiment.
Current trends consistent with mortgage demand
Data from the Council of Mortgage Lenders show the numbers of mortgage borrowers in the first quarter of 2017 are the same or higher than the first quarter of 2016 in all regions outside southern England. Only in London were mortgaged homeowner numbers materially lower, down by 19%, on 2016 Q1.
Lower numbers were also recorded in the South East (-9%) and South West (-6%).
Lowest price inflation in London for five years
The annual rate of house price growth in London has declined from 13.0% a year ago to just 3.5% in April 2017. This is the lowest level of annual growth for five years. Average prices have posted a modest gain in the three months to April but the current quarterly growth rate is less than half the level recorded over the last four years.
Price rises to continue in large regional cities
Outside southern England, prices are set to continue to increase over 2017 as households take advantage of low mortgage rates and an improving economic outlook. On paper, there is material upside for prices outside southern England but much depends on how market sentiment is impacted by the general election, rising inflation and a growing focus on the Brexit negotiations later in 2017 and into 2018.