City house price growth is set to shake off Brexit uncertainty, rising by reach 6-7% over the course of the year.
Hometrack said it had raised its 4% prediction made in December due to the continued growth in large regional cities outside London and the South East.
Richard Donnell, research and insight director at Hometrack, said: “Despite a material slowdown in the rate of house price growth in south eastern England, the headline rate of city house price inflation is holding up, despite the squeeze on real incomes and uncertainty around Brexit.
“The Brexit impact was greatest over the second half of 2016 but house price growth has picked up over the last six months.”
Hometrack’s latest UK Cities House Price Index shows that house price inflation is running at 5.1%, down from 8.8% a year ago.
London house price growth has declined to 2.6%, the lowest level since March 2012.
House price inflation in the capital is down by 10.1% from June 2016 due to affordability pressures and the impact of the Brexit vote on buyer sentiment.
Despite this, Hometrack said that the rate of the slowdown is starting to flatten out and average prices in London were up 1.7% in the second quarter.
“In London, the Brexit vote has had a greater impact on buyer sentiment and combined with affordability issues has led to a 10% reduction in the annual growth rate over the last 12 months. However, although house price inflation has fallen sharply in the capital it is starting to flatten out and the rate of growth is likely to avoid year on year price falls in the coming months,” said Donnell.
Bristol, Oxford and Cambridge have all seen a marked slowdown in the rate of house price growth – down by between 6% and 10% over the past 12 months.
In Oxford and Cambridge house price growth is below the rate of general inflation at 2.1% and 1.9 % respectively. This means house prices are falling in real terms for the first time since in five years.
Founder and CEO of eMoov.co.uk, Russell Quirk, said: “City living will always drive the UK market and so it gives a good indicator of where is quickest out of the blocks while the overall market is still wiping the post-election sleep out of its eyes. The latest data from Hometrack suggests that the UK market has also almost broken free from the shackles of Brexit uncertainty, with the market performing notably better than last year.
“It is a mixed bag of sweets in terms of the current UK market and London seems to be the liquorice where buyer demand is concerned, a classic favourite, but an acquired taste and one that is waning in popularity – particularly inner London.”
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