The North-South divide for house prices appears to be narrowing, according to a new report.
The latest Hometrack UK Cities House Price Index has found regional cities outside of the South East are registering greater house price growth than London, Cambridge and Oxford.
It revealed that house price inflation has hit a 12-year high in large regional cities such as Manchester, Birmingham and Newcastle, with buyers shrugging off Brexit fears to take advantage of record low mortgage rates.
Manchester remains the fastest growing city with an annual growth rate of 8.8%, followed by Birmingham at 8.0% and then Bristol at 7.3%.
In contrast, house price inflation in London continues to slow and has now reached 4.9% year-on-year, which means the capital is among the five slowest growing cities along with Oxford and Cambridge.
This is the lowest rate of house price growth recorded in London for five years as affordability pressures continue to impact demand for housing.
City level house prices grew 3.5% in the first quarter, the highest quarterly rate of price inflation for since May 2014.
The uplift in prices over the last three months has pushed the annual headline rate of growth for the index to 6.4%, up from 4.9% in December 2016.
Hometrack said that the impetus for this higher rate of inflation is emanating from large regional cities such as Newcastle, Glasgow, Edinburgh and Manchester which registered above average price increases over the first quarter of 2017.
Richard Donnell, insight director at Hometrack, said: “Buyers outside the south of England appear to be shrugging off concerns over Brexit and a squeeze on real incomes to take advantage of low mortgage rates. This is shifting the dynamics of the housing market. Cities that have been driving house price growth over the last two to three years, such as London and Cambridge, are now seeing a significant slowdown while large regional cities continue to register robust and sustained levels of house price growth.
“The announcement of the General Election may create some short term uncertainty although comparing the profile of sales volumes between election years and non-election years there is no material difference.
“Compared to the level of uncertainty over Brexit, it is debateable whether the election will really make a material difference to buyers’ decision in the next two months. In our view the current market trends appear well set for the rest of 2017 where above average growth in regional cities offsets weak, single digit increases in southern cities.”
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