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Annual price growth begins to fall below inflation in major UK cities
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Original Source: Property Eye.
Original Author: Marc Shoffman.
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House price growth in London has reached the lowest level for five years, data from Hometrack has revealed.
The Hometrack UK Cities House Price Index shows that price growth in London slipped to 2.6% in June at £492,700, the lowest rate since March 2012.
Meanwhile, growth rates among previous top performers have fallen below the 2.6% rate of inflation during the first half of this year.
This time last year Oxford and Cambridge had annual returns of 10% and 8% respectively.
But in the six months to June 2017, prices in Oxford were up 2.1% to £424,800, while Cambridge is at 1.9% to £425,500.
Overall, annual price growth across the 20 cities has fallen from 8.8% last year to 5.1% in June and 5% in the first six months of 2017 to £252,400.
Despite the slowdown, Hometrack now expects city house price inflation to reach 6-7% over the course of the year, higher than the 4% prediction made in December 2016. This change was attributed to “robust house price growth in many large regional cities”.
Richard Donnell, research and insight director at Hometrack, said: “Despite a material slowdown in the rate of house price growth in south-eastern England, the headline rate of city house price inflation is holding up, despite the squeeze on real incomes and uncertainty around Brexit.
“The Brexit impact was greatest over the second half of 2016 but house price growth has picked up over the last six months. This is consistent with an 11% increase in the number of home purchase mortgages, which is also 5% higher than the five-year average.
“In London, the Brexit vote has had a greater impact on buyer sentiment, and combined with affordability issues has led to a 10% reduction in the annual growth rate over the last 12 months.
“However, although house price inflation has fallen sharply in the capital, it is starting to flatten out and the rate of growth is likely to avoid year on year price falls in the coming months.”
