The latest Hometrack index reveals that city house price inflation across the UK has dropped from 6.6% 12 months ago to 4.9%. Manchester is the fastest growing city (7.3%), followed by Birmingham (6.7%) and Edinburgh (6.6%).

The upward momentum in house price growth across regional cities shows no sign of slowing, largely due to falling unemployment and record low mortgage rates, supporting demand.In contrast, house prices in London are currently falling in real terms.

Other high capital value cities like Cambridge and Oxford have also registered a steep slowdown in the rate of price inflation over the last 12 months as affordability pressures constrain housing demand.

 

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UK city house price growth

Cities house price inflation – August

Price changes

London house price growth

London house prices are falling in real terms at 1.9% growth, compared to 2.9% inflation.

Fastest growing cities

Manchester, Birmingham and Edinburgh are the UK’s fastest growing cities this month.

House price falls

Aberdeen remains the only UK city in the top 20 list to suffer house price falls.

House price growth

 

Price increases since 2009 range between +85% in London to just +12% in Glasgow.
Regional cities are unlikely to post London levels of growth, but we expect the gap in growth from 2009 to close.

City level summary

 

City spotlight – Edinburgh

 

Edinburgh has recorded the third fastest rate of growth in the UK this month, at a rate of 6.6%. This is in keeping with the property market across Scotland, which is currently the strongest it’s been for almost a decade, despite the political uncertainty seen across the UK. However, the issue facing many Scottish cities at the moment is demand exceeding supply, which is creating a chronic shortage of housing stock and is pushing house prices up.

Average growth of last 12 months (%)

Average growth since 2007