London among worst UK cities for house price growth as it's now 'stuck in neutral'

 
Rebecca Smith
The current rate of house price growth has dipped below the level of consumer price inflation
The current rate of London house price growth has dipped below the level of consumer price inflation (Source: Getty)

London house prices are "stuck in neutral" with an average rise of 0.5 per cent in the three months to September, according to the latest Hometrack UK Cities House Price Index.

With the general rate of consumer price index inflation running at three per cent, the index found that in 85 per cent of the areas covered by the London city index house prices are now falling in real terms.

And Hometrack said further price falls in real terms "are inevitable".

The 10 London areas with the biggest rise in house price growth

Local authority Average price %yoy September 2017 %yoy September 2016
1. Epping Forest £482,300 4.2 per cent 10.8 per cent
2. Gravesham £286,600 4.0 per cent 12.7 per cent
3. Runnymede £452,300 3.5 per cent 7.7 per cent
4. Waltham Forest £457,800 3.5 per cent 12.5 per cent
5. Newham £374,300 3.2 per cent 12.0 per cent
6. Bexley £342,800 3.2 per cent 12.3 per cent
7. Dartford £305,300 3.2 per cent 11.7 per cent
8. Redbridge £435,400 2.9 per cent 12.0 per cent
9. Barking and Dagenham £290,900 2.8 per cent 15.2 per cent
10. Croydon £390,400 2.7 per cent 11.6 per cent

Worst London areas for house price growth Average price %yoy September 2017 %yoy September 2016
1. City of London £775,000 -5.0 per cent 4.3 per cent
2. Kensington and Chelsea £1,254,900 -1.9 per cent -0.9 per cent
3. Tower Hamlets £481,100 -1.7 per cent 6.9 per cent
4. Hammersmith and Fulham £758,700 -0.8 per cent -0.1 per cent
5. Richmond upon Thames £721,900 -0.6 per cent 4.0 per cent

Richard Donnell, research and insight director at Hometrack, said:

The London housing market is now firmly stuck in neutral. Stretched affordability, low yields for investors and concerns over Brexit and its impact on employment are weighing on market sentiment.

As a result, further house price falls in real terms across London are inevitable as prices re-align to what buyers are willing to spend. Consequently, nominal house price inflation in London looks set to remain between one per cent to three per cent over the next six to twelve months.

House price growth across many southern cities also remains flat. In Cambridge and Oxford, the annual rate of growth is below the general rate of inflation at 2.3 per cent for both.

It's a different tale for Scotland however, which has witnessed an acceleration in house price growth. Housing sales in Scotland over the last quarter have increased by a fifth when compared to the previous year.

Glasgow has also registered a significant uptick in house price growth, rising from 1.8 per cent a year ago to 5.6 per cent today.

City index ranking of house price growth

City Current price %yoy Sep-17 %yoy Sep-16
1. Edinburgh £219,500 6.7 per cent 3.8 per cent
2. Manchester £156,800 6.5 per cent 6.6 per cent
3. Birmingham £153,200 5.9 per cent 6.6 per cent
4. Bournemouth £285,100 5.4 per cent 6.4 per cent
5. Leicester £163,300 5.4 per cent 5.5 per cent
6. Glasgow £120,300 5.3 per cent 1.8 per cent
7. Bristol £276,900 5.1 per cent 11.8 per cent
8. Portsmouth £230,300 5.1 per cent 8.1 per cent
9. Nottingham £144,200 5.0 per cent 5.5 per cent
10. Southampton £222,600 4.4 per cent 7.4 per cent
11. Leeds £161,100 4.3 per cent 4.9 per cent
12. Sheffield £135,100 4.2 per cent 3.7 per cent
13. Liverpool £114,800 3.2 per cent 2.2 per cent
14. Belfast £129,100 3.1 per cent 2.9 per cent
15. Newcastle £125,900 3.0 per cent 1.5 per cent
16. Cardiff £198,000 2.4 per cent 6.4 per cent
17. London £493,800 2.3 per cent 8.9 per cent
18. Oxford £427,100 2.3 per cent 7.8 per cent
19. Cambridge £433,600 1.7 per cent 5.1 per cent
20. Aberdeen £173,900 -1.8 per cent -10.6 per cent
20 city index £251,600 4.9 per cent 6.0 per cent
UK £211,200 3.6 per cent 6.0 per cent

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