London house price growth falls to lowest for over three years

House prices in London are now rising at 7.6 per cent per year - the lowest figure for 39 months according to property data consultancy Hometrack.

“In London and southern cities homeowners are facing the greatest affordability pressures, while the buoyant investor market has been impacted by fiscal changes as well as tougher underwriting standards for mortgage borrowers” according to Richard Donnell, insight director at Hometrack.

“In larger regional UK cities, such as Birmingham and Manchester, affordability remains attractive and we believe there is room for further price growth over 2017. We predict that city house price growth in 2017 will run slightly higher than the current consensus of two to three per cent, however this will largely be driven by the scale of the slowdown in London” he adds.

The overall headline rate of inflation for Hometrack’s UK Cities House Price Index - which looks at 20 locations around the UK - is currently running at 7.7 per cent, marginally higher than the 7.3 per cent recorded a year ago. 

The cities where house prices are now decelerating after five years of high growth, such as London, Oxford, Bournemouth, Bristol and Cambridge, are set to record a five per cent contraction in sales over the course of this year, Hometrack predicts.

In contrast, cities registering sustained growth in house prices are the ones expected to record higher turnover over 2016, with the greatest uplift likely in Birmingham, Leeds, Leicester and Nottingham.