Manchester is leading the way in house price growth among major UK cities, according to a report warning regional cities should be prepared for a slowdown.
The Hometrack research said London’s rate of annual price growth had now dipped below the average for the country’s 20 biggest cities as a whole as the market juggled affordability, weak supply and uncertain times.
Aberdeen was the only location to endure house price falls – near 6%, the index showed – a consequence of continuing struggles for the oil industry on which its economy has depended.
It found growth in Manchester of 8.8% year-on-year last month. The report suggested that prices remained within reach there – especially in the current record-low interest rate environment.
However, it did not expect the pace of price increases to be sustained, given worries for the economy in the wake of the Brexit vote.
Official data this week showed that consumer prices were now growing at the same rate as wages – suggesting households are starting to feel a squeeze on their finances.
It is also felt the scenario of strong demand versus weak supply in the UK market, that has been the main driver of house price growth in recent years, is now beginning to ease as house-hunting numbers dwindle.
Hometrack’s report said: While growth in Manchester has hit close to 9%, the supply/demand dynamics are not strong enough in regional cities outside southern England to support double digit rates of house price growth.
Insight director at Hometrack, Richard Donnell, said: Buyers are fully aware of the Government’s plans and timescales for Brexit but there remains huge uncertainty over what this means for the economy over the next two to three years and beyond.
In cities where affordability remains attractive we expect demand to hold up in the short term albeit with slower growth in sales volumes.
Overall we continue to expect the rate of house price growth to moderate over the rest of 2017.
Hometrack’s figures are released before official market data from the Office for National Statistics which has highlighted a UK growth slowdown since the beginning of the year.
The research put the cost of an average home in London just below £490,000 – compared to £152,000 in Manchester.
The cheapest city to buy a property, in average price terms, was Liverpool at almost £116,000 followed by Glasgow at £118,000. Price growth in those cities stood at 6.8% and 7.7% respectively.
:: Below are average house prices in February in the 20 cities in Hometrack’s index, and the annual rate of increase:
1. Manchester, £151,800, 8.8%
2. Portsmouth, £225,600, 8.1%
3. Bristol, £261,900, 8%
4. Glasgow, £117,900, 7.7%
5. Birmingham, £148,300, 7.4%
6. Leicester, £162,400, 7.2%
7. Liverpool, £115,600, 6.8%
8. Bournemouth, £275,500, 6.2%
9. Southampton, £220,600, 6%
=10. London, £488,700, 5.6%
=10. Sheffield, £130,800, 5.6%
=10. Nottingham, £140,700, 5.6%
13. Edinburgh, £203,900, 5.5%
=14. Leeds, £154,800, 5%
=14. Cardiff, £193,700, 5%
16. Belfast, £127,700, 3.8%
17. Newcastle, £123,800, 3.7%
18. Oxford, £409,700, 3.4%
19. Cambridge, £418,400, 2.2%
20. Aberdeen £181,600, minus 5.9%