House price growth in London slows to weakest levels in two years, report shows

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House price growth in London has slowed to its weakest levels in nearly two years but there are signs that home buyers in other major cities continue to feel confident in the market, according to a report.

Property values in London increased by 0.9% in the three months to September, marking the slowest rate of growth seen there since January 2015.

The report is compiled by property analysts Hometrack and tracks house price movements in the UK's 20 biggest cities.

It said market conditions in London were particularly weak, with the new supply of homes coming to market growing faster than sales, which had fallen back in recent months due to lower demand from buyers.

On a year-on-year basis, house price growth in London was still in double digits, with values rising by 10% over the last year to reach £480,500 on average.

But Hometrack expected the annual rate of house price growth in London to slow closer to 5% by the end of the year.

Bristol continued to see the fastest annual house price growth in September out of the cities monitored, with values increasing by 12.3%. The average home in Bristol now had a value of £259,800.

Hometrack said across the UK's major cities generally, annual house price growth was holding up, with values around 8.5% higher than they were a year earlier. A year ago, annual house price growth was running at 5.7%.

Large cities away from the South East of England, such as Liverpool, Manchester, Cardiff and Birmingham, had seen accelerations in house price growth since the start of the year.

Homes were relatively affordable in these cities compared with some other parts of the UK, meaning there was more room for house prices to continue going up.  

Richard Donnell, Insight Director at Hometrack, said: "In the immediate aftermath of the vote to leave the EU there was little obvious impact on the housing market and the rate of house price growth.

"Three months on and it is becoming clearer that households in large regional cities outside southern England continue to feel confident in buying homes and taking advantage of record low mortgage rates where affordability remains attractive for those with equity.

"In London, market conditions are the opposite and new taxes are hitting investor demand while homeowners face stretched affordability levels which are combining to slow the rate of house price growth."

Stamp duty was increased for buy-to-let investors from April 1, and there had been signs this disrupted the market. 

As well as London, Oxford, Cambridge and Aberdeen had seen house price growth weaken since the start of the year. Hometrack said slower price growth in these cities was due to affordability issues as well as economic confidence.

Aberdeen was the only city in the study where house prices were lower than they were a year ago, with a 9.5% fall taking the average property value there to £181,300.

Here were the average house prices across the UK's major cities in September, followed by the annual increase and the quarterly increase, according to Hometrack: 

:: Bristol, £259,800, 12.3%, 1.1%

:: London, £480,500, 10.0%, 0.9%

:: Southampton, £216,900, 8.6%, 1.7%

:: Cambridge, £422,200, 8.0%, 3.0%

:: Birmingham, £144,900, 8.0%, 1.7%

:: Portsmouth, £218,500, 7.9%, 0.4%

:: Manchester, £147,400, 7.7%, 1.5%

:: Cardiff, £191,800, 7.7%, 2.5%

:: Bournemouth, £269,600, 6.7%, 1.8%

:: Liverpool, £112,600, 6.6%, 2.6%

:: Nottingham, £138,200, 6.4%, 0.3%

:: Leicester, £156,100, 6.0%, 1.0%

:: Leeds, £152,800, 5.8%, 0.1%

:: Oxford, £411,900, 5.6%, minus 2.5%

:: Sheffield, £128,500, 4.0%, 1.0%

:: Glasgow, £113,500, 4.0%, 0.5%

:: Edinburgh, £201,200, 3.9%, 1.5%

:: Newcastle, £122,800, 3.2%, 0.6%

:: Belfast, £126,600, 2.2%, 0.6%

:: Aberdeen, £181,300, minus 9.5%, minus 3.0%