Property price growth in key UK cities is slowing, particularly in London, with three seeing prices fall year on year, the latest index shows.
Growth is currently being led by cities outside the South East, with Edinburgh, Birmingham, Glasgow and Manchester all recording growth of 7% of more per annum while UK wide it is down to 5.4%.
The December Hometrack cities index also shows that growth in London was just 1.8% and prices fell on an annual basis in Oxford, Cambridge and Aberdeen, down by 0.9%, 1.4% and 9.9% respectively.
Edinburgh topped the table with annual growth of 8.2%, taking the average price to £218,600, followed by Birmingham up 7.5% to £154,100, Glasgow up 7.2% to £124,900 and Manchester up 7% to £157,900.
London saw the slowest annual growth at 1.8%, taking the average price to £488,400 and the Hometrack report says that there is an increasing amount of price discounting in the city. In 2014, when the rate of house price growth was almost 20% per annum, the average discount to asking price was just 0.5% in London.
However, the report reveals that weaker, price sensitive demand has seen the discount widen to an average of 4% with the largest discounts of up to 10% being registered in inner London where price falls are most concentrated.
According to Graham Davidson, managing director of buy to let specialist Sequre Property Investment, the index points to Northern cities being the best locations for landlords currently seeking to increase their portfolios.
‘Manchester and Liverpool have remained among the strongest contenders with other cities such as Nottingham and Birmingham also among the top areas for property growth. For buy to let investors, these are the cities to be looking at over the next 12 months,’ he said.
‘Those who haven’t already moved away from the London market are advised to act quickly, not only have the rental yields remained virtually non-existent, but capital growth is also declining. Cities like Manchester and Liverpool offer much better property deals in both the short and long term, he added.
The picture has been largely consistent throughout the year, according to Russell Quirk, chief executive of hybrid estate agent Emoov. ‘Buyers across areas with more affordable house prices did not have to lower their expectations as much over the last year and as a result, are now enjoying a quicker return to market normality,’ he said.
‘Those in London and the surrounding areas will have to wait a little while longer, partly due to far greater levels of price inflation, but also due to a refusal to accept the previous market reality and lower their price expectations in the first place,’ he added.
