Bristol has become the first city outside of the South East to see house prices rise at a faster rate than London for more than six years, according to Hometrack.
The firm’s latest UK Cities House Price Index reveals that year-on-year house price inflation in Bristol reached 14.1% in May as it surpassed London (13.8%) and Cambridge (13.4%) to top the Index. This is part of trend whereby large regional cities have registered the highest growth rates over the past three months, led by Liverpool (5.4%), Bristol (4.2%), Manchester (3.9%) and Leeds (3.7%) driven by an improving economic outlook and strong demand from investors ahead of the stamp duty deadline on 1 April 2016.
Overall city level house price inflation rose from 10.8% in April to 11.2% in May.
However, London was one of eight cities to register slower year on year growth, slowing from 14.2% in April to 13.8% in May. Hometrack expects to see a rapid deceleration in house price growth throughout the remainder of 2016, particularly in London, as buyers adopt a wait and see approach to assess the short term impact on financial markets and the economy at large in the wake of the EU vote.
Richard Donnell, insight director at Hometrack, said: “House price inflation in major cities outside of London and the South East, such as Bristol and Liverpool has been accelerating but it is now expected to slow towards low single digits in the coming months as demand cools on the back of the EU referendum result. At present we expect housing market turnover to bear the brunt of increased uncertainty rather than house prices.
“Standing back from the immediate turmoil in financial markets, the reality is that the fundamentals of the housing market remain unchanged with record low mortgage rates and a wide imbalance between supply and demand. The UK doesn’t have a problem with housing demand, the more important question is how many buyers and sellers feel confident to participate in the market in the near term.
“Market sentiment can change quickly and the sooner a clear picture emerges over the likely impact on the economy and the outlook for jobs and mortgage rates the sooner transaction volumes should stabilise and more buyers return to the market.”