UK house prices: London has recorded the lowest rate of annual house price growth for five years

Shruti Tripathi Chopra
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House price growth in London to likely to slow even further (Source: Getty)

London recorded the lowest rate of annual house price inflation for five years in April, according to Hometrack's latest house price index.

Figures for last month show that house price growth in the capital in April stood at 3.5 per cent compared to 13 per cent at the same time last year. Hometrack expects house price growth in London to slow further to between two and three per cent by the end of the year.

The index also revealed that the overall house price growth across UK cities has dropped to 5.3 per cent, down from the 8.7 per cent registered in April 2016.

Read more: This is why the number of home buyers in London has dropped

Hometrack blamed weaker levels of demand from home owners and investors, affordability constraints, tax changes and weaker market sentiment for the fall in house price growth.

Manchester registered the fastest rate of growth at 8.4 per cent in April, up from 6.3 per cent a year ago. Cities across the Midlands enjoyed robust growth including Leicester (7.7 per cent), Birmingham (7.7 per cent) and Nottingham (7.2 per cent).

Meanwhile, cities in southern England such as Bristol, Cambridge, Oxford have all seen the rate of growth slow from double to single digits over the last year.

Read more: Asking prices of London homes hit new record in spite of looming elections

Richard Donnell, insight director at Hometrack, said: “Looking ahead we expect current trends to continue with house price growth losing momentum in cities across southern England. This is due to record high housing affordability and subsequently a large numbers of households being priced out of the market.”

“Outside southern England, we anticipate prices will continue to increase over 2017 as households take advantage of record low mortgage rates and an improving economic outlook.

"On paper there still remains material upside for prices in the Midlands, northern England and Scotland but much depends on how market sentiment is impacted by factors such as the General Election, Brexit negotiations and rising inflation which will create a decline in real wage growth."

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