"Weak growth in London is acting as a drag on the headline rate of growth. We expect this pattern to remain a feature of the market for the rest of the year and into 2018."
Manchester has seen prices rise by 7.3%, closely followed by Birmingham at 6.7%. Edinburgh has also seen a marked improvement of 6.6% in the past year.
Meanwhile the headline rate of growth across UK cities is running at 4.9% compared to 6.6% in August 2016, with London acting as a drag on the headline rate of growth. House prices inflation in the capital is running at a 1.9% per annum, below the general rate of inflation (2.9% CPI) meaning that London house prices are falling in real terms.
Other cities that have recently enjoyed strong growth such as Cambridge (2.8%) and Oxford (3.8%) have also registered a steep slowdown in the rate of price inflation over the last 12 months as affordability pressures constrain housing demand. Even so, Aberdeen remains the only city in the top 20 to register negative growth down -1.9% year on year.
New analysis accompanying this month’s index reveals that the total value of private housing in the UK’s top 20 cities has passed the £3 trillion mark for the first time. A staggering 66% of that figure or £2.0 trillion is accounted for by the value of London which covers London and its commuter hinterland. Birmingham and Manchester the second and third most valuable cities accounting for £152bn (5%) and £132bn (4%) respectively.
In the past twelve months the overall value of housing in UK cities has grown £89bn.
Richard Donnell, Research and Insight Director at Hometrack, said: “House prices continue to rise on the back of sustained price inflation in large regional cities as unemployment falls and mortgage rates remain low. Weak growth in London is acting as a drag on the headline rate of growth. We expect this pattern to remain a feature of the market for the rest of the year and into 2018.
“The accumulation of housing equity from rising house prices means there is a major opportunity from innovation in financial and housing products to help households leverage or access housing equity. This is a complex and evolving market with consumer demands being shaped by demographic and economic change.
“The markets for down-sizing and equity release are relatively small but further pressure for innovation are inevitable as households seek additional ways to assist younger generations into housing and onto the housing ladder while also facing up to the challenges of how to fund the cost of living into later life. While there is a significant amount of housing equity in aggregate, a varied distribution in the scale of housing equity available to different households means different solutions will be required to meet consumer demand as this market segment evolves.”