London and the south hit with rapid house price growth slowdown
At 1.9% Hometrack’s 20 City Index recorded its lowest level of quarterly growth for six months in August, while led by a decline in cities across the south of England year-on-year house price growth slowed to 8.2%. This compares with an annualised growth rate of 9% in May this year, and 8.4% in July.
Of the 20 cities, Bristol recorded the fastest rate of annual growth at 13.1%, followed by London at 10.4%, but growth in both is slowing. Cambridge registered the fastest deceleration in growth from an annual rate of 16% in March to just 6% in August as affordability pressures and weaker investor demand impact growth.
Indeed London only registered a 0.9% increase in house prices over the last three months. According to Hometrack if this trend continues, which it says seems “highly likely”, then house price in the capital will be running at 6% per year by the end of 2016 and is on course for low single digit growth by spring 2017.
Richard Donnell, insight director at Hometrack, said: “Record unaffordability, tax changes impacting investor demand and high stamp duty costs are combining to reduce market activity in the face of rising supply.”
He adds: “Despite the overall slowdown in London, it is dangerous to view the capital as a single housing market. While many of the central boroughs have seen low rates of growth, in parts of outer London where house prices are 30% lower than the London average – such as Barking, Dagenham and Havering – prices are rising more than 15%, although these areas are starting to slow.”
Outside of the south, regional cities such as Glasgow, Liverpool, Birmingham and Edinburgh all posted above average growth in the last three months as low mortgage rates and affordable property prices supported growth.