The slowdown in London house price growth appears to have “bottomed out” after hitting a five-year low last month.
The latest Hometrack UK Cities House Price Index shows that house prices rose 2.8% last month, up from 2.3% in June.
Prices have consistently risen by 0.5% across London over the last six months and are now 1.4% higher since May.
The rate of house price growth in the capital is stabilising due to lower transaction volumes and an absence of forced sellers.
Housing turnover across London has fallen by 17% since 2015 as affordability pressures and recent policy changes impact demand.
Annual house price growth across UK Cities stands at 5.3% compared to 7.4% in July 2016. Growth has picked up in recent months on faster rate of monthly price increases and continues to remain robust in regional cities.
Birmingham (8%), Manchester (7.1%) and Nottingham (6.9%) are the UK’s fastest growing cities this month. Growth has been consistent for the last year in Birmingham and Manchester as prices rise off strong demand and attractive affordability.
Aberdeen was the only UK city to suffer house price falls, with the average value now 16% lower than in December 2014 after a fall in the oil price hit the local economy.
Richard Donnell, research and insight director at Hometrack, said: “The London housing market has registered a rapid deceleration in house price growth since the start of 2016 as affordability pressures impact demand and the Brexit vote adversely affected housing market sentiment. Turnover is down 15% from the recent high recorded in 2015 and sellers are slow to accept downward adjustments in prices in the face of weaker, price sensitive demand.
“The downward pressure on prices is greatest in the most expensive parts of the capital where demand has been weaker since the end of 2014. These inner London markets are registering small year on year price falls of up to -2%. The downward pricing pressure is less evident in the lowest value markets of London which have registered above average growth and price inflation of over 3%.”
Founder and CEO of eMoov.co.uk, Russell Quirk, said: “Although overall price inflation may be down when compared to July, this is certainly a seasonal influence and not one that should cause any degree of worry for homeowners across the UK’s major cities.
“Many outside the London bubble will be delighted to see the UK’s second city leading the way for price growth, followed by a strong supporting cast from across the nation. It further highlights the strength and diversity of the UK market and how it has performed in the face of an adverse political and economic environment.
“That said, the end of an 18-month slowdown in London property values is a sure sign that the market is once again finding its feet. It’s likely that we will now see property price growth begin to return to previous levels over the coming months as the holidays end and it’s back to business for all.”
Hometrack City House Price Index
| City | Average price | %yoy Jul-16 | %yoy Jul-17 | Variance |
| Birmingham | £155,400 | 6.8% | 8.0% | 1.2% |
| Manchester | £157,500 | 7.3% | 7.1% | -0.1% |
| Nottingham | £148,300 | 6.4% | 6.9% | 0.5% |
| Southampton | £229,000 | 7.8% | 6.5% | -1.4% |
| Leeds | £162,600 | 5.7% | 6.2% | 0.5% |
| Leicester | £165,100 | 6.2% | 5.8% | -0.4% |
| Portsmouth | £231,300 | 9.4% | 5.7% | -3.7% |
| Bournemouth | £280,900 | 6.8% | 5.4% | -1.3% |
| Edinburgh | £209,400 | 2.0% | 5.4% | 3.4% |
| Cardiff | £198,900 | 5.4% | 5.3% | -0.2% |
| Glasgow | £119,300 | 2.2% | 5.2% | 3.0% |
| Sheffield | £133,900 | 2.8% | 4.7% | 1.9% |
| Bristol | £268,400 | 14.3% | 3.7% | -10.7% |
| Belfast | £129,500 | 4.1% | 3.1% | -1.0% |
| Liverpool | £116,900 | 4.6% | 2.8% | -1.8% |
| London | £494,300 | 11.2% | 2.8% | -8.4% |
| Newcastle | £127,200 | 2.9% | 2.8% | -0.1% |
| Cambridge | £432,400 | 8.1% | 1.9% | -6.2% |
| Oxford | £418,400 | 9.5% | 1.2% | -8.4% |
| Aberdeen | £179,700 | -9.2% | -3.0% | 6.2% |
| 20 city index | £252,700 | 7.4% | 5.3% | -2.1% |
| UK | £212,100 | 6.9% | 4.8% | -2.1% |
Source: Hometrack UK City House Price Index
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