House prices in key cities around the UK increased by 4.9% in the year to August 2017 but growth is down from the 6.6% recorded in the same month in 2016.
However, the last six months have seen steady growth both year on year and month on month with average monthly growth at 2.5% in August, up from 1.1% in March and annual growth up from 2.7% in May.
The data from real estate company Hometrack also shows that Manchester is the fastest growing city with annual price growth of 7.3% while London has the slowest annual growth at 1.9% and in Aberdeen prices are down 1.9%.
Other cities showing strong annual growth include Birmingham up 6.7%, Edinburgh up 6.6%, Leicester up 6.4%, Nottingham up 6.2%, and Southampton up 5.9% and Bournemouth up 5.8%.
The data also shows that the total value of all private homes across the 20 cities covered by the index exceeds £3 trillion of which two thirds is in London.
The index report says that falling unemployment and record low mortgage rates are supporting demand as house prices in large regional cities continue to increase off a low base.
In contrast, low house price inflation in London is acting as a drag on the headline rate of growth. House prices in London are currently falling in real terms. The nominal growth rate of 1.9% is below the general rate of inflation.
Other high capital value cities such as Cambridge and Oxford have also registered a steep slowdown in the rate of price inflation over the last 12 months as affordability pressures constrain housing demand.
The figures are likely to be useful for buy to let investors, with evidence suggesting they are moving north in search of higher yields. According to Graham Davidson, managing director of buy to let specialist, Sequre Property Investment, any buy to let investors looking to make decent returns from their assets need to head north.
‘It’s clear that those who have chased capital growth for many years are now steering clear and looking up north where property is much more affordable, rental yields are significantly higher and capital growth is following a firm upward curve,’ he said.