Hometrack data suggests that annual house price inflation in London has fallen to 6.4 per cent, the lowest level since June 2013.
Compared to 2009, house prices in the capital are up 85 per cent but Hometrack expects the rate of house price inflation to slow towards zero over 2017.
The headline rate of growth for Hometrack’s UK Cities Index – which looks at 20 of the country’s largest urban markets – is now running at 6.9 per cent compared to 7.9 per cent one year ago.
In contrast to London, the housing recovery in large regional cities such as Newcastle, Glasgow and Liverpool has been far more protracted – house prices are only up between 13 and 16 per cent since the downturn.
Bristol remains the fastest growing city with annual house price inflation holding steady at 9.5 per cent although down from a recent high of 14 per cent recorded in June last year.
Outside of southern England, Manchester is registering the greatest uplift with an increase of 8.3 per cent in the last year. In addition to Manchester, London has also now been overtaken by Birmingham and Liverpool, where similarly prices are rising off a lower base and affordability levels remain attractive.
Hometrack claims slowing growth in the capital is due to the drag on prices in the inner-London housing markets with the highest values. These continue to register modest year-on-year price falls of up to three per cent due to weaker demand than in outer London.
“The contrast with large regional cities outside of London and the South East couldn’t be starker. The question is how much further house prices in regional cities could have to run were house prices to fully ‘price in’ low mortgage rates supported by rising incomes and employment” says Richard Donnell, Insight Director at Hometrack.